limestone contract

8/10/2019 Limestone Contract

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Table of Contents

Page

Article 1. Definitions.................................................................................................

Article 2. Commencement and Term of the Contract.........................................Article 3. KSPCs Obligations...............................................................................

Article 4. SELLERs Construction related Obligations....................................

Article 5. SELLERS Operation and Maintenance Obligation........................

Article 6. SELLERs Supply Obligations............................................................

Article 7. Delivered Price.......................................................................................

Article 8. Payment....................................................................................................

Article 9. Liquidated Damages..............................................................................

Article 10. Force Majeure..........................................................................................

Article 11. Insurance..................................................................................................Article 12. Proprietary Rights..................................................................................

Article 13. Infringement of Patents........................................................................

Article 14. Performance Security............................................................................

Article 15. Termination.............................................................................................

Article 16. Indemnification......................................................................................

Article 17. Dispute and Arbitration.......................................................................

Article 18. Assignment..............................................................................................

Article 19. Representations and Warranties.........................................................

Article 20. Governing Law.......................................................................................Article 21. Waivers.....................................................................................................

Article 22. Notices......................................................................................................

Article 23. Financing Development of Project.....................................................

Article 24. Confidentiality........................................................................................

Article 25. No Third Party Rights...........................................................................

Article 26. Validity.....................................................................................................

Article 27. Survival....................................................................................................

Article 28. Entire Agreement...................................................................................

APPENDIX

I. Limestone Quality SpecificationsII. Technical SpecificationIII. Completion TestsIV. ConsentsV. Form of Performance SecurityVI. Major Milestone ScheduleVII. LCF SiteVIII.Adjustment to Delivered PriceIX. Insurances

X. Form of Lien waiver

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XI. Form of Certificate of Final CompletionXII. Form of Notice of Substantial Completion

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Limestone Supply Contract

This limestone supply contract (Contract) is made on the ___th day of____________, 2009 by and between:

KEPCO SPC Power Corporation, a corporation organized andexisting under and by virtue of the laws of the Republic of thePhilippines with its principal office located at 7/F, Cebu HoldingsCenter, Cebu Business Park, Cebu City, as represented herein by itsPresident and CEO, __________________, hereinafter referred to asthe "KSPC",

and

_________________________ (_____), a corporation organized andexisting under and by virtue of the laws of the Republic of the

Philippines with its principal office located at__________________________, as represented herein by its Presidentand CEO, ___________________, hereinafter referred to as the"SELLER".

KSPC and the SELLER are at times individually referred to herein as aParty and collectively, as the Parties.

Witnesseth

WHEREAS, KSPC intends to procure from the Seller the construction of the Facility(as defined below), the supply of Limestone (as defined below) and the provision ofthe Services (as defined below), each in connection with the operation of the PowerPlant (as defined below);

WHEREAS, the SELLER is prepared to provide each of the construction of theFacility, the provision of Limestone and the provision of the Services;

NOW THEREFORE, the Parties hereto agree as follows:

Article 1. Definitions

1.1 Unless otherwise defined, the following terms used in this Contract shall havethe meanings and definitions stated in this Article:

Affiliate means a person or entity who, with respect to a specified person orentity, directly or indirectly through one or more intermediaries Controls, oris Controlled by, or is under common Control with, the person or entityspecified;

Antiquities has the meaning given to it in Article5.22;

Applicable Laws means (i) the Philippine Constitution, (ii) all laws,statutes, treaties, rules, codes, ordinances, regulations, certificates, decisions,orders, memoranda, circulars, decrees, resolutions, directives, rulings,interpretations, approvals, licenses, and permits of any GovernmentalAuthority, and (iii) judgments, decrees, injunctions, writs, orders or like

actions of any court, arbitrator or other administrative, judicial or quasi-judicial tribunal or agency that are binding on a Party as they may be

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amended, supplemented, replaced or reinterpreted by a duly authorizedGovernmental Authority or otherwise modified from time to time;

ASTM Standards means the standards promulgated by the AmericanSociety for Testing and Materials;

Bid Security means the bid bond submitted by the SELLER in connectionwith its winning bid proposal for this Contract;

BOC has the meaning given to it in Article4.25.1(b);

Brought Back Equipment means all of the SELLERs equipment,machinery, instruments and tools which are imported, rented or procuredtemporarily by the SELLER to perform the Construction Work, and which willnot become a permanent part of the Facility, title to which does not belong toKSPC;

Certificate of Final Completion has the meaning given to it in Article4.33;

Change means a change to the Construction Work as agreed upon in aChange Order;

Change Order has the meaning given to it in Article4.36.1(a);

"Claims" includes all and any loss, claims, demands, liabilities, costs,damages, expenses, fines and penalties;

Commercial Operations Date means, with respect to each of Unit 1 andUnit 2 of KSPC Power Plant, the actual dates designated to the SELLER byKSPC in writing as the dates on which each such unit of KSPC Power Plantshall be ready to commence operation. For informational purposes only, theestimated commercial operations date for Unit 1 is February 2011 and May2011 for Unit 2;

Completion Tests means the tests for the Facility set forth in Appendix III;

Consents means:

(a) in the case of the SELLER, the licenses, permits, approvals,authorizations and exemptions set forth inAppendix IVand suchadditional licenses, permits, approvals, authorizations and exemptionsas shall be necessary or required for the SELLER to perform itsobligations under this Contract, and

(b) in the case of KSPC, the licenses, permits, approvals, authorizationsand exemptions set forth inAppendix IVand such additional licenses,permits, approvals, authorizations and exemptions, each to the extentrequired in order for KSPC to perform its obligations under thisContract;

Construction Period shall refer to the period for the construction of theFacility, which shall be completed not later than the Target Completion Date;

Construction Warranties means the warranties made by seller in Article4.37;

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"Construction Work" means all acts or actions necessary for the procurement,construction, installation, erection, start-up, testing and commissioning of theFacility, whether at the LCF Site or elsewhere and the performance of allwarranty obligations under this Contract, as more particularly set out inArticle 4.;

Contract has the meaning given to it at the preambles to this Contract;

Contract Period has the meaning given to it in2.1.1(a);

Contract Quantity has the meaning given to it in Article6.3;

Contract Year means any successive 12-month period commencing on theFirst Delivery Date;provided, that if this Contract terminates before the end ofany such 12-month period, the Contract Year with respect to such period shallmean the period commencing on the day immediately succeeding the end ofthe immediately preceding Contract Year and ending on such terminationdate;

Control and its variants means, with respect to any specified person, thepower to direct the policies and management of such person, directly orindirectly, through the ownership of voting securities, contract or otherwise;

Default Rate means a per annum rate equal to the rate of interestannounced by Citibank, N.A., from time to time, at its principal office locatedat New York, (or any successor financial institution), as its prime commerciallending rate, plus one percent (1%);

Delivered Price has the meaning given to it in7.1.1(a);

Delivery Point, also known as KSPCs Silo, means the area designatedby KSPC within the Power Plant where the crushed Limestone shall beunloaded and stored;

Design Documents means the engineering designs, drawings, plans, list ofEquipment, equipment specifications, critical calculations, Facility testprocedures, Facility work procedures, quality assurance and controlprocedures, operating and maintenance manuals relating to the Facility asand when they are developed and amended, from time to time, and asapproved by KSPC in writing;

Dispute means any dispute, controversy or claim arising out of or inconnection with this Contract (including any questions regarding the

existence, validity, arbitrability, breach or termination thereof);

Environmental Laws means all Applicable Laws, applicable environmentalguidelines or similar guidelines relating to actual or potential effects on theenvironment of the activities on, at or near the LCF Site or the Power Plantpremises contemplated by this Contract, the disposal of materials, thedischarge of chemicals, gases or other substances or materials into theenvironment, or the presence of such materials, chemicals, gases or othersubstances in or on the LCF Site including the Equator Principles and theenvironmental and related standards adopted by the International FinanceCorporation from time to time;

Equipment shall mean all machinery, components, parts, apparatus, tools,

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materials and goods of any kind which become a part of the Facility, butexcluding Brought-Back Equipment;

Extended Warranty Period has the meaning given to it in Article4.43;

Facility shall mean the facility to be constructed and installed by the

SELLER on the LCF Site where the Limestone materials of the KSPC PowerPlant shall be unloaded, handled, processed, stored and crushed;

Final Completion has the meaning ascribed to such term in Article4.33;

"Financing Agreements" at any time means:

(c) all:

(i) bonds, notes or other debt instruments or securities;

(ii) loan, guarantee, letter of credit or other credit facilities;

(iii) finance or capital leases;

(iv) interest, currency or commodity swaps, caps, collars, floors orother hedging agreements (including, options relating to any ofthe foregoing); and

(v) other agreements or instruments creating or evidencingindebtedness for borrowed money

which have then been issued or entered into KSPC or any of itsAffiliates for the purposes of the Power Plant; and

(d) the security documents, direct agreements, intercreditoragreements, co-ordination agreements and other ancillary agreementsrequired at such time pursuant to any of the instruments or agreementsreferred to in paragraph (a) above;

First Delivery Date shall have the meaning given to it in Article6.1.1(b);

"Force Majeure" has the meaning given to it in Article10.1;

Good Construction Practicesmeans relevant practices, procedures andmethods conforming to all Applicable Laws and otherwise generally engagedin or approved by the international electric power supply industry in the

course of constructing, installing, erecting and testing limestone crushingfacilities that, at any particular time, in the exercise of reasonable judgment bya skilled and experienced person seeking in good faith to perform itscontractual obligations and in the light of the facts which are known or whichshould reasonably have been known at the time a decision is made, wouldresult in the performance of the Construction Work in a manner consistentwith safety, reliability, environmental protection, economy and expedition.Such practices, procedures and methods may evolve over time but generallymodified practices, procedures and methods shall be applied only withprospective effect and as shall be appropriate for a limestone crushing facilityof the same general type and under the same type of climatic conditions as theFacility;

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Good Engineering Practicesmeans relevant practices, procedures andmethods conforming to all Applicable Laws and otherwise generally engagedin or approved by the international electric power supply industry in thecourse of designing and engineering, limestone crushing facilities that, at anyparticular time, in the exercise of reasonable judgment by a skilled andexperienced person seeking in good faith to perform its contractual

obligations and in the light of the facts which are known or which shouldreasonably have been known at the time a decision is made, would result inthe performance of the Construction Work in a manner consistent with safety,reliability, environmental protection, economy and expedition. Such practices,procedures and methods may evolve over time but generally modifiedpractices, procedures and methods shall be applied only with prospectiveeffect and as shall be appropriate for a limestone crushing facility of the samegeneral type and under the same type of climatic conditions as the Facility;

Good Operating Procedures means, with respect to the SELLER, relevantpractices, procedures and methods conforming to Applicable Laws andotherwise generally engaged in or approved by the international electric

power supply industry in the course of operating and maintaining limestonecrushing facilities that, at any particular time, in the exercise of reasonablejudgment by a skilled and experienced person seeking in good faith toperform its contractual obligations and in the light of the facts which areknown or which should reasonably have been known at the time a decision ismade, would be expected to accomplish the desired result in a mannerconsistent with safety, reliability, environmental protection, economy, andexpedition. Such practices, procedures and methods may evolve over time,

but generally modified practices, procedures and methods shall be appliedonly with prospective effect and as shall be appropriate for a limestonecrushing facility of the age and condition of the Facility. With respect to theFacility, and without prejudice to the generality of the foregoing, GoodOperating Procedure shall include:

(e) maintenance of materials, resources and suppliesadequate to meet the Facilitys needs under normal operatingconditions and reasonably foreseeable abnormal operating conditions;

(f) the availability of sufficient operating personneladequately experienced and trained to operate and maintain theFacility properly, efficiently and within the manufacturers guidelinesand specifications and capable of responding to emergency conditions;

(g) the conduct of preventive, routine and non-routinemaintenance on a basis that ensures reliable, long term and safe

operation by knowledgeable, trained and experienced personnelutilizing proper equipment, tools and procedures;

(h) appropriate monitoring and testing during operation toensure equipment is functioning as designed; and

(i) the operation of equipment in a safe manner and in amanner safe to workers, the general public and the environment;

Governmental Authority means the Republic of the Philippines, anyprovince, city, municipality or other political subdivision, agency, authority,

board, bureau, commission, court, department, instrumentality, or any other

governmental authority having jurisdiction over the Parties, their respective

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property and assets and the performance of obligations under this Contract;

HZW shall mean any pollutant, contaminant, solid waste, hydrocarbonproduct, toxic or hazardous substance or waste, flammable, explosive orradioactive materials, or similar item or material regulated under or subject toany Environmental Laws, as relevant;

ICC has the meaning given to it in Article17.2.1(a);

ICC Rules has the meaning given to it in Article17.2.1(a);

IEIRD has the meaning given to it in Article4.25.1(b);

Imported Equipment and Items shall mean all machinery, components,parts, apparatus, tools, materials and goods of any kind, spare parts andconsumables supplied or procured from the outside of the Philippines by theSELLER;

Information has the meaning given to it in24.1.1(a);

Insolvency Event means in respect of a Party, the passing of a resolution forthe bankruptcy, insolvency, winding up, liquidation of, or other similarproceeding relating to that Party, the appointment of a trustee, liquidator,custodian, provisional manager or similar person in such a proceeding whichappointment has not been set aside or stayed within ninety (90) days of suchappointment; or the making by a court having jurisdiction of an orderwinding up or otherwise confirming the bankruptcy or insolvency of thatParty, which order has not been set aside or stayed within ninety (90) days;

Invoice has the meaning given to it in8.1.1(a);

Invoice Dispute Notice has the meaning given to it in8.1.1(d);

KSPC Event of Default has the meaning given to it in Article15.4;

KSPC Indemnitees has the meaning given to it in16.1.1(a);

KSPCs LESSOR shall mean the lessor of the Power Plant premises,specifically, the National Power Corporation (NPC), or as the case may be, thePower Sector Assets and Liabilities Management Corporation (PSALM);

LCF Site means the site upon which the Facility is to be constructed, asshown in the map appended asAppendix VII;

Lenders means those persons who from time to time have entered intocommitments, upon and subject to the terms and conditions set out in any ofthe Financing Agreements to provide any finance for the purposes of thedevelopment, design, financing, insurance, construction, operation andmaintenance of the Power Plant;

Limestone means the limestone sourced either by Seller or KSPC under theterms of this Contract;

"Limestone Quality Specifications shall mean the specification described in

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Appendix Iof this Contract;

Liquidated Damages shall mean the liquidated damages for delay ascalculated in accordance withArticle 9.;

Make-up Limestone has the meaning given to it in Article6.10.1(d);

Major Milestone Schedulehas the meaning given to it in Article4.5;

Monthly Delivery Schedule has the meaning given to it in Article6.9;

Notice of Change has the meaning given to it in Article4.36.1(b);

NPC means National Power Corporation of Republic of Philippines;

"O&M Manuals" means the operation and maintenance manuals includingrelevant manufacturers' recommendations in respect of the operation andmaintenance of the Facility and Equipment;

O&M Period has the meaning given to it in Article5.2;

Performance Security means the performance security to be provided bythe SELLER to KSPC in accordance withArticle 14.and in the form set out inAppendix V;

Power Plant, also referred to as the KSPC Power Plant, means the 2x100MW Circulating Fluidized Bed Combustor (CFBC) power plant in theMunicipality of Naga, Cebu, including all associated equipment andaccessories to be installed therein;

Power Sales Contract means a power sales contract entered into by KSPCwith a third party for the sale and delivery of electricity by KSPC to such thirdparty;

Project Loan means the loans and credit facilities (including political riskinsurance, if any) to be obtained by KSPC to finance the Power Plant(including the Construction Work) or the financing with respect to the PowerPlant to be obtained by KSPC whether in the form of a loan, a sale andleaseback, an equity investment in the nature of a limited partnership interestor otherwise, and any modifications or replacements thereof;

Proprietary Information has the meaning ascribed to such term in Article12.1.1(a)(ii);

Punchlist Items means the items of Construction Work requiringcompletion or correction prior to Final Completion that do not affect theperformance, operation, safety, testing or mechanical or electrical integrity ofthe Facility, as agreed between the SELLER and KSPC;

"Reasonable and Prudent Operator" means an operator acting according toGood Operating Procedures;

SELLER Event of Default has the meaning given to it in Article15.3;

SELLER Shortfall has the meaning given to it in Article6.10.1(a);

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"Services" means all of the mobilisation, operation, maintenance and otherservices and/or works and/or costs to be provided and/or carried outand/or paid, and all equipment, spare parts, materials, consumables andother things to be supplied or procured by the SELLER for the purpose ofoperating and maintaining the Facility pursuant to this Agreement;

Storage Silo means the area within the LCF Site where the limestone shallbe unloaded and stored;

Subcontractor means any person or entity with whom the SELLER hasentered into any agreement to perform any part of the Construction Work asapproved by KSPC;

"Successor Operator" has the meaning given to it in Article15.7.1(b);

"System Emergency" means any unforeseeable condition affecting thePhilippine transmission system, which may cause:

(a) the disconnection of the Power Plant from such transmissionsystem;

(b) an inability on the part of an offtaker or intermediary toaccept all or a portion of the electrical generation of the Power Plant;

(c) the suspension of electricity off-take from the Power Plantin order to prevent or avoid significant disruption of service to anofftaker or intermediary or danger to life or property; or

(d) material disruption to the operation of the Power Plant;

Target Completion Date means 28 February, 2010, as such date mayadjusted in accordance with this Contract;

Technical Specifications means the technical requirements for the designand construction of the Facility as set forth inAppendix IIof this Contract;

Termination Date has the meaning given to it in2.1.1(a);

Termination Payment A means the residual value of the Facility at theTermination Date as determined by depreciating the value of the Facility onanas-builtbasis as at Final Completion on a straight line basis over 25 years ofeconomical operation;

Termination Payment B means:

(a) the residual value of the Facility at the Termination Date as determinedby depreciating the value of the Facility on anas-builtbasis as at FinalCompletion on a straight line basis over 25 years of economicaloperation; plus

(b) an amount which is necessary to result in an after-tax internal rate ofreturn of []% on the amount determined under paragraph (a) abovefrom the Final Completion date up to the Termination Date;

"Transco" means the National Transmission Corporation or its successors and

assigns;

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Unit 1 means the first generating unit of the Power Plant scheduled byKSPC for commercial operation;

Unit 2 means the second generating unit of the Power Plant scheduled byKSPC for commercial operation;

VAT has the meaning given to it in Article4.25.1(a);

"WESM" means the wholesale electricity spot market created in accordancewith Republic Act No. 9136;

Warranty Period means a period of twenty-four (24) calendar monthscommencing on the date of Final Completion;

1.2 Interpretation

Unless the context otherwise requires:

(a) Words denoting the singular shall include the plural andvice versa.

(b) All references to any contract or agreement means such contract oragreement and all schedules, appendices, exhibits and attachmentsthereto as amended, supplemented or otherwise modified and in effectfrom time to time, and shall include a reference to any document whichamends, supplements or replaces it, or is entered into, made or givenpursuant to or in accordance with its terms.

(c) The terms include and including shall be construed as being at alltimes followed by the words without limitation, whether or not thewords without limitation are expressly stated in any particularinstance in this Contract.

(d) In respect of the performance of the obligations under this Contract,references to the SELLER shall be deemed to include the SELLERand all of its subcontractors.

1.3 Headings and Article References

Article headings are for convenience of reference only and shall not affect theconstruction of this Contract. References to Articles, paragraphs, annexes andschedules, unless otherwise indicated, are references to Articles, paragraphs,annexes and schedules of this Contract.

1.4 Precedence

In case of conflict between provisions of the Articles and any Appendices ofthis Contract that may be attached hereto, the Articles shall take precedence inthe construction and interpretation of such provisions. Subject to theforegoing, if any requirements specified in any Article conflict with those ofany other Article, or if any requirements specified in any Appendix conflictwith any other requirements in such Appendix, the more detailedrequirements shall prevail. Notwithstanding the above, the provisions of thisContract, including all Appendices shall be, as far as reasonably practicable,construed as complementary rather than conflicting.

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(d) fire fighting water line;

(e) piling works for pulverized limestone storage silo;

(f) compressed air line for instrument and control excluding air for blowerto convey powdered limestone to the Storage Silo which shall be

supplied by the SELLER;

KSPCs responsibility to provide the above utilities/supply lines shall end atthe boundary located one (1) meter outside the LCF Site.

3.3 Non-Interference

Without prejudice to the SELLER's obligations under this Contract KSPC shallcomply, and shall procure that any person employed or engaged by KSPC andany other person duly authorised by KSPC who has access to the Facility shall

comply with Applicable Laws and shall not interfere with, delay or disturbthe SELLER in performing the Services.

3.4 Hazardous Waste and Materials

KSPC shall be responsible for any HZW on LCF Site prior to the date of thisContract or brought onto or released at the LCF Site at any time through nofault of the SELLER provided that:

(a) this Article3.4shall not exclude the SELLER from its obligations underArticles4.16and4.21; and

(b) the SELLER shall take all reasonable steps to limit the effects of anyHZW.

Article 4. SELLERs Construction related Obligations

4.1 Construction

(a) The SELLER is responsible for the design (assuming 25 years ofeconomical operation), procurement, construction, testing, start-up andperformance of related activities for the successful completion of theConstruction Work and delivery of the Facility in compliance with thisContract, to achieve Final Completion by the Target Completion Date.The Facility shall include:

(i) a jaw crusher and hammer mills;

(ii) conveyor belts;

(iii) screen, cyclone and blower, pipe line;

(iv) dust collector; and

(v) Storage Silo enough for 6 days plant operation,

in each case, as further described inAppendix II. It is understood that

the SELLER may be required by KSPC to install other equipment

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should KSPC consider that circumstances warrant such installation.

(b) The Parties acknowledge that the SELLER is obligated to perform alltasks, other than those identified as obligations of KSPC inArticle 3.,necessary to deliver to KSPC a completed and fully operational Facility.The Construction Work shall include the following obligations:

(i) the overall and complete responsibility for projectmanagement, coordination, supervision and generalmanagement of the Construction Work;

(ii) undertaking all clearing, grubbing, cutting,excavation, filling and compaction with respect to theConstruction Work;

(iii) providing all Equipment, materials and instructionsnecessary for the performance of the Construction Work;

(iv) the transportation and, prior to Final Completion, thecare, custody and storage of Equipment, spare parts,consumables, and other items necessary for the timely andsuccessful achievement of the objectives of this Contract;

(v) ensuring the Facility has an initial stock of spare partsand consumables in accordance with Good ConstructionPractices;

(vi) the preparation of all forms and applicationsnecessary to obtain all import and customs clearances andpermissions (showing KSPC to be importer of record) to enablethe importation of the Imported Equipment and Items and anyother necessary equipment and materials to the Republic of thePhilippines;

(vii) clearing through customs all Imported Equipmentand Items and other imported equipment and materials,transporting them to the LCF Site, and prior to FinalCompletion, assuming care and custody thereof and providingstorage for the same;

(viii) the supply, construction and completion of theConstruction Work and the erection and installation of theEquipment;

(ix) the procurement and maintenance of all applicableConsents;

(x) the supply of any and all key personnel necessary orrequired hereunder for the management and operation of theFacility during commissioning;

(xi) the organization and carrying out of thecommissioning, testing, trials and completion of the Facility; and

(xii) ensuring that all Construction Work is performed,

executed and supplied in compliance with Good Construction

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Practices, Applicable Law (including Environmental Law) andConsents and, to the extent that it will not result in a materialincrease in costs to or obligations of the SELLER of performingthe Construction Work and will not result in a material adversechange to the Major Milestone Schedule, the additionalprocedures and requirements of the Lenders, to the extent

required, in order to ensure that the Construction Work meetsthe requirements of this Contract.

4.2 Design and Engineering

The SELLER shall carry out, and be responsible for, the design of theConstruction Work and shall be responsible for ensuring that the design of theFacility (i) complies with the Technical Specifications, (ii) is in accordance withall Applicable Laws and Good Construction Practices.

4.3 As-Built Drawings and Documents

The SELLER shall prepare, and keep up-to-date, a complete set of as-builtrecords of the execution of the Construction Works, showing the exact as-builtlocations, sizes and details of the work as executed. These records shall bekept on the LCF Site. Two copies shall be supplied to KSPC prior to thecommencement of the Final Completion Test.

4.4 Construction

(a) Subject to compliance with Articles4.26,the SELLER shall enter intothe contract(s) for the supply of labor and materials for theconstruction of the Facility and shall commence the Construction Workat the LCF Site not later than three (3) months from the date of theexecution of this Contract.

(b) The SELLER shall give KSPC at least [30] days prior written notice tocommencement of the Construction Work at the LCF Site.

(c) Failure of the SELLER to commence the construction within the periodprovided above shall result in the forfeiture of the SELLERsPerformance Security and the right of KSPC to terminate this Contractin accordance withArticle 15..

4.5 Major Milestone Schedule

The major milestone schedule attached hereto asAppendix VI(the Major

Milestone Schedule) sets forth the schedule by which the SELLER shallcommence, prosecute and complete the Construction Work.

4.6 Interfaces

The SELLER shall make an evaluation of the scope and status of all collateralwork as it might affect the Construction Work recognizing that interfaces mayoccur in varying degrees with any or all of the activities of KSPC and othersincluding the construction contractor in respect of the Power Plant.

4.7 Control of the Construction Work

The SELLER shall be solely responsible for all construction means, methods,

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techniques, quality, sequences, procedures, and safety programs in connectionwith the performance of the Construction Work, and shall furnish the servicesof all supervisors, foremen, skilled labor and all other personnel necessary toperform the Construction Work. During the SELLERs performance of theConstruction Work, other persons may be engaged in other operations on orabout the LCF Site. The SELLER and its Subcontractors and vendors shall

work in harmony with others engaged at the Site including the constructioncontractor in respect of the power plant so that neither the Construction Work

by the SELLER nor the operations of others at the LCF Site shall be delayed,endangered or interfered with.

4.8 Procurement

Except for scheduled relief for delays expressly permitted as the direct resultof Change Orders mutually agreed to by KSPC and the SELLER, the SELLERshall have no claim against KSPC for, and shall not be entitled to any reliefunder this Contract due to non-delivery, late delivery of or defects in anyEquipment and supplies, unless caused by KSPC its agents, servants or

workmen (other than the SELLER, any Subcontractor or any agent, servant orworkmen thereof).

4.9 Information

As requested from time to time, the SELLER shall provide KSPC withreasonable information which is developed as part of the Construction Workand is needed by KSPC relating to the Construction Work or the Facility,including information needed to prepare KSPCs tax returns, calculate andpay applicable taxes and maintain KSPCs insurance.

4.10 Emergencies

In the event of any emergency endangering life or property, the SELLER shalltake such action as may be reasonable and necessary to prevent, avoid, ormitigate injury, damage, or loss and shall, as soon as possible, report any suchincidents, including SELLERs response to the emergency, to KSPC.Whenever the SELLER has not taken adequate precautions in compliancewith the SELLERs safety plan for the safety of the public or the protection ofthe Construction Work or of structures or property on or adjacent to the LCFSite and an emergency requiring immediate action occurs, KSPC, with orwithout notice to the SELLER, if the delay that would be incurred by givingthe SELLER such notice would further endanger personnel or property, may,

but shall be under no obligation to, provide reasonable protection by takingany action that KSPC shall deem necessary, but the taking of such action by

KSPC or the KSPCs failure to do so shall not limit the liability of the SELLER.

4.11 Site Conduct

The SELLER shall prohibit, and shall use all reasonable efforts, to prevent, onthe LCF Site, the use or consumption of alcoholic beverages, drugs or otherillegal activities, and conduct that is disorderly or disruptive. The SELLERshall promptly terminate, or have terminated, the employment of any personemployed by the SELLER or a Subcontractor or vendor who has not acted inaccordance with any Applicable Law or provision of this Contract.

4.12 Facilities

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The SELLER shall provide for the use of its employees, agents and invitees allnecessary temporary housing, sanitation facilities, including washrooms,portable toilets and showers, and any other facilities or services that may berequired to perform the Construction Work or to comply with ApplicableLaw.

4.13 Construction labor and supplies

(a) Except as provided in theArticle 3.above, the SELLER shall provide,install, complete and pay for all labor, Equipment, tools, supplies,construction equipment and machinery, fuel, limestone, utilities(including electricity, water/sewer, telephone, etc., except as otherwiseexpressly provided herein) and consumables, transportation and otherfacilities and services (including any temporary materials, equipment,supplies and facilities) necessary for the proper execution andcompletion of the Construction Work, including the Completion Tests.

(b) All Construction Work performed by the SELLER under this Contract

shall be in accordance with Good Construction Practices, including therelevant manufacturers written instructions and the specificinstructions of such manufacturers representative. [The SELLER shall

be responsible for the layout of the Construction Work and shallperform all necessary surveying, all in accordance with the Contract.]

4.14 Access

The SELLER shall afford LCF Site access to KSPC, Transco, NPC, Lenders andtheir representatives and to others as may be necessary or appropriate to theservicing, maintaining, modifying, or upgrading of the land or facilitieslocated on the land, which access shall not materially interfere with theuninterrupted right of the SELLER to have access to or be in control of theLCF Site or to complete the Construction Work, none of which shall materiallyaffect the cost or schedule requirements and deadlines of the SELLERhereunder.

4.15 O&M Manuals

No later than sixty (60) days prior to the Target Completion Date, the SELLERshall prepare in three-ring bound books and deliver to KSPC in English fifteen(15) sets of O&M Manuals and two (2) sets of CD-ROM containing electronicfiles of all O&M Manual. Subsequent to such delivery, the SELLER shallupdate and revise the O&M Manual, when and as necessary, until FinalCompletion. The SELLER shall obtain for KSPCs reference all instruction

manuals and special directions from Equipment manufacturers. The O&MManual shall be based on Good Engineering Practices. The SELLER agreesthat adherence to the O&M Manual shall allow operation of the Facility at thelevels of capacity, efficiency, availability and maintainability contemplated bythis Contract and will in no way impair any warranty or guaranty onequipment, materials or services to be assigned by it to KSPC.

4.16 Maintenance of LCF Site

(a) The SELLER shall, in the performance of the Construction Work:

(i) maintain the LCF Site free of waste material and

rubbish;

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(ii) clear the LCF Site of temporary structures, surplusmaterial, equipment and tools upon completion;

(iii) remove from the LCF Site any HZW in accordancewith Good Construction Practices and Applicable Laws; and

(iv) pay damages, fines, and penalties which may arisebecause of noncompliance by the SELLER with any requirementreferred to in this Article4.16.

(b) In the event that the SELLER fails to perform its obligations under thisArticle4.16within thirty (30) days after written notice from KSPC,KSPC may perform such SELLER obligations. In such event, theSELLER shall reimburse KSPC for all reasonable costs of such clean-upor remediation. KSPC, if it exercises ordinary care, shall have noliability for any equipment or materials of the SELLER or Subcontractorwhich may be damaged as a result of the exercise by KSPC of its rightsunder this Article4.16.

4.17 Safety

(a) The safety of the SELLER, Subcontractors, vendors and theiremployees, agents, representatives and invitees and any other personwho enter the LCF Site for any purpose relating to the SELLERscarrying out its obligations under this Contract (including KSPC, theKSPC representatives, Transco, the Lenders and each of theiremployees, agents, representatives and invitees) shall be the SELLERsresponsibility. KSPC shall have no responsibility or, unless the agents,workmen or servants of the KSPC present safety hazards, liability forSite safety. The SELLER shall promptly notify the KSPC, in writing, ofany hazardous conditions, property or equipment at the LCF Site. IfKSPC requests that the SELLER provide certain safeguards required, inthe KSPCs reasonable judgment, for the safety of persons or propertyon or near the LCF Site, the SELLER shall promptly provide suchsafeguards.

(b) The SELLER shall initiate and maintain safety precautions andprograms to conform with Applicable Laws and Good ConstructionPractices.

(c) The SELLER shall ensure that it, its employees, agents and invitees andits Subcontractors, vendors and their employees, agents and invitees,during performance of any of the Construction Work, comply with (i)

all Applicable Laws relating to health and safety and (ii) all directionsby the SELLER regarding protective clothing, head covering, eyeprotection and the like.

4.18 Environmental Conditions

(a) The SELLER shall take all reasonable steps to protect the environment(both on and off the LCF Site) and to limit damage and nuisance topeople and property resulting from pollution, noise and other resultsof its operations.

(b) The SELLER shall provide dust control of all excavations, material sites,

roads, and disposal areas within its assigned areas of responsibility

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(f) The SELLER shall assist KSPC in obtaining KSPC Consents.

4.21 SELLER to Inform Itself

(a) The SELLER shall be deemed to have satisfied itself as to all theconditions and circumstances which may affect the Delivered Price and

the performance by it of the Construction Work and its obligationsunder or in connection with this Contract and/or the timing of itsperformance and, without limiting the generality of the foregoing, as tothe possibility of executing the Construction Work as shown anddescribed in the Contract by the required time.

(b) The SELLER represents that it has examined the condition of the LCFSite and its surroundings, and the SELLER assumes the risk of anysuch conditions and will perform the Construction Work for theDelivered Price without any recourse against KSPC, unless suchconditions represent existing HZW for which KSPC is responsibleunder Article3.4.

(c) Where the SELLER has received representations, reports, drawings,surveys, operating or maintenance manuals from any Subcontractor, itshall be obliged to make full inquiry, to the extent necessary, as to theirsufficiency and accuracy.

(d) Any inspection, review, and/or comment, or failure to do so, by KSPCwith respect to any portion of the Construction Work shall not (i)relieve, affect or reduce SELLERs obligation to complete theConstruction Work in accordance with the provisions of this Contractor (ii) constitute a waiver of KSPCs rights under this Contract withrespect to defective or non-conforming Construction Work. KSPC shallnot assume any responsibility regarding any erroneous interpretationor conclusion by the SELLER out of data furnished by KSPC unless thedata supplied was in error.

4.22 Progress Reports

(a) The SELLER shall at all times keep KSPC fully informed as to theprogress of the Construction Work and provide KSPC with suchinformation as they shall request from time to time.

(b) The SELLER shall furnish a monthly report to KSPC within ten (10)days after the end of each calendar month. This report shall set out theprogress of the Construction Work against the Major Milestone

Schedule and any other information reasonably requested of by KSPC.

4.23 Costs and Expenses

The cost of investment for the design, construction, and installation as well asoperation and maintenance of the above Facility shall be entirely borne by theSELLER, including procurement of related permits and clearances, supply ofequipment, materials, tools, supplies, and other materials necessary toefficiently and safely unload and store the Limestone at KSPCs Silo.

4.24 Quality Assurance and Control

The SELLER shall establish and implement a quality assurance program

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which meets the quality requirements under this Contract and GoodConstruction Practices and shall be responsible for overall quality controlactivities for the Construction Work, including those of Subcontractors.

4.25 Taxes

(a) The SELLER shall bear and pay, and be responsible for the payment of,all taxes, assessments, levies and other charges to be imposed, assessed,levied or charged in any territory in connection with the performanceof the Construction Work and execution, delivery and filing orrecording, if any, of this Contract. For all invoices presented to KSPC bythe SELLER, each invoice shall include, as a separate item in theinvoice, a twelve percent (12%) value added tax (VAT) charge as theSELLER is a VAT registered entity in the Philippines. It is theSELLERs responsibility to familiarize himself with Philippine Laws,rules and regulations with respect to the taxes. The Parties agree thatthe value added tax for this Contract is already included in theDelivered Price.

(b) The SELLER shall be responsible for securing the original Import Entry& Internal Revenue Declaration (IEIRD) from the Philippines Bureauof Customs (BOC) for all Equipment or Construction Work underthis Contract imported into the Philippines and promptly submit theoriginal IEIRDs to KSPC after the custom clearance is completed. If theSELLER fails to secure and submit the original IEIRDs to KSPC, KSPCshall reserve the right to withhold the amount of import VAT from anypayables to the SELLER.

4.26 Subcontracting

(a) The SELLER may subcontract any part of the Construction Work to anySubcontractor approved by KSPC.

(b) The SELLER shall ensure that the terms of all subcontracts areconsistent in all material respects with the obligations and duties of theSELLER under this Contract and the rights of KSPC.

(c) In addition, each subcontract must provide that, upon termination ofthis Contract, the subcontract may, at the option of KSPC, be assignedto KSPC by the SELLER without requiring the prior consent of anyother Party to the subcontract or subject to any other condition. TheSELLER hereby assigns to KSPC, to the extent permitted by ApplicableLaw, all its interest including warranty rights in any subcontracts now

existing or hereinafter entered into by the SELLER for performance ofany part of the Construction Work which assignment will be effectiveonly upon (a) the termination of this Contract or (with respect towarranty rights) upon a breach of any Construction Warranty bySELLER and (b) acceptance by KSPC of such assignment in writing andonly as to those subcontracts which KSPC designates in said writing.

(d) Without prejudice to the foregoing, the SELLER must ensure thatsubcontracts shall permit the assignment by the SELLER of itswarranty rights under such subcontracts to KSPC upon the occurrenceof any default by the SELLER under this Contract without requiringthe prior consent of any other Party to such subcontract or subject to

any other condition.

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Plant premises. No use or temporary possession over the area by the SELLERshall be construed as ownership thereof.

4.30 Title Passage and Risk of Loss

(a) Notwithstanding the transfer of title under Article4.29, the SELLER

shall take full responsibility for the care of the Construction Work,including the Equipment, spare parts and consumables and anymaterial inside the Philippines under its scope of supply or any sectionor portions thereof. If any damage or loss shall happen to any portionof the Construction Work including the Equipment, spare parts andconsumables from any cause whatsoever, then, unless KSPC shallotherwise stipulate in writing, such damage or loss shall be made goodto the satisfaction of KSPC by and at the sole cost of the SELLER,subject always to the right of the SELLER to be reimbursed to theextent that monies are received from the applicable insurance policies.The SELLER shall also be liable for any loss of or damage to theConstruction Work including the Equipment, spare parts and

consumables occasioned by itself or by any Subcontractor in the courseof any operations carried out by itself or its Subcontractors for thepurpose of completing any outstanding Construction Work orproviding the services. The SELLER shall be responsible for preparingclaims to the insurance company incurred while the SELLER hasresponsibility pursuant to this Article4.30and shall perform allnecessary administrative functions and provide any other supportiveinformation in pursuit of such claims.

(b) Upon Final Completion and except where SELLER takes over theoperation of the Facility in accordance with Article 5.1, care, custodyand control of the Facility shall pass to KSPC.

(c) In the event that any Construction Work is either sunk in, or representsa danger to shipping in, any navigable channel in the Philippines then,unless KSPC shall otherwise stipulate in writing and, in any event, as isrequired by the Governmental Authority in the Philippines or any localgovernment of the Philippines, the SELLER shall recover and removethe same, notwithstanding that the same may be declared a total loss.

4.31 Project Meetings

The SELLER and KSPC shall meet when necessary, as mutually agreed, todiscuss the implementation of the Construction Work with a view to ensuringthat the Construction Work proceeds in a timely manner and in accordance

with this Contract.

4.32 [Not Used]

4.33 Final Completion

Final completion of the Facility (Final Completion) by the SELLER shall bedeemed to have occurred following receipt by KSPC of a certificate in the formofAppendix XIXI (Certificate of Final Completion) and satisfaction of thefollowing conditions:

(a) the Facility together with all interfaces are physically completed and

KSPC has received all Design Documents;

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(b) SELLER shall have successfully completed the Completion Tests to thesatisfaction of KSPC;

(c) SELLER shall have furnished to KSPC test results and test datasubstantiating the successful completion of Completion Tests and suchtest results and test data are satisfactory to KSPC;

(d) all Liquidated Damages, if any, shall have been paid in full;

(e) the SELLER has delivered to KSPC:

(i) a certificate together with copies of lien releases from allSubcontractors stating that all amounts owed by the SELLER tothe Subcontractors have been paid in full and that there are nooutstanding claims against the SELLER by any Subcontractorwith regard to the Construction Work; or

(ii) an indemnity, separate and apart from any indemnity provided

by the SELLER under this Contract and in form and substancesatisfactory to KSPC in respect of any such lien or claims of theSubcontractors;

(f) SELLER and KSPC shall have mutually agreed on a list of PunchlistItems and all Punchlist Items have been duly completed in accordancewith the Contract;

(g) the SELLER has removed from the LCF Site all of its and itsSubcontractors and vendors' of any tier construction-related wastematerial, rubbish, temporary structures, surplus material, equipmentand tools, including the Brought Back Equipment;

(h) all other requirements of the SELLER under this Contract (except theSELLERs warranty obligations and related obligations under Articles4.38to4.44) have been fully performed; and

(i) KSPC shall have issued a certificate to the SELLER in the form of noticeof Final Completion set out inAppendix XIIaccepting the Certificate ofFinal Completion.

4.34 No Modification to Target Completion Date

There shall be no modification of the Target Completion Date, except asexpressly permitted by Articles4.35.1(b),4.35.2(a)or10.8of this Contract and

only as specifically agreed to by the Parties in writing.

4.35 Suspension of Construction Work

4.35.1 Suspension of Construction Work

(a) KSPC may, from time to time, at its sole option, by writtenNotice of Change signed by KSPC in accordance with Article4.36, order the SELLER to suspend, at any time, the performanceof all or any portion of the Construction Work for such period oftime as may be appropriate for the convenience of KSPC. Thisright to suspend the SELLERs performance of the Construction

Work is intended only to facilitate KSPCs convenience and shall

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not be construed as imposing upon KSPC any duty to inspectthe Construction Work or to review or approve the methods bywhich the SELLER performs the Construction Work.Furthermore, such right to suspend performance of theConstruction Work shall not impose upon KSPC an obligation tosuspend the Construction Work for the benefit of the SELLER.

(b) A suspension pursuant to this Article4.35.1shall be a ChangeOrder under Article 4.36; provided, however, that,notwithstanding any other provision of this Contract to thecontrary, the SELLER shall be entitled to an equitableadjustment in the Delivered Price and an adjustment in theTarget Completion Date only to the extent permitted underArticle4.35.2(a), except as prohibited by Article4.35.2(b)below.

(c) Upon receipt of any Notice of Change ordering such suspensionof Construction Work, the SELLER shall, unless the Notice ofChange directs otherwise:

(i) immediately discontinue performance of theConstruction Work on the date and to the extent specifiedin the notice;

(ii) enter into no agreements with Subcontractors formaterials, services, facilities or other items with respect tosuspended Construction Work other than to the extentrequired in the notice;

(iii) promptly make every reasonable effort to obtainsuspension upon terms satisfactory to KSPC of allagreements with Subcontractors to the extent they relateto performance of Construction Work suspended;

(iv) continue to protect, secure and maintain the ConstructionWork completed prior to the Notice of Change againstdamage, deterioration or loss; and

(v) use its best efforts to minimize costs associated with suchsuspension.

(d) Upon receipt of notice to resume performance of the suspendedConstruction Work, the SELLER shall immediately resumeperformance of the Construction Work to the extent directed in

such notice. The SELLER shall resequence and reschedule theperformance of the Construction Work to minimize the cost anddelay of the suspension. The SELLER shall also correct anydeterioration or defect in or loss of the Construction Work whichhas occurred during the suspension.

4.35.2 Adjustments due to Suspension

(a) If suspensions of Construction Work for a cumulative period inexcess of seven (7) days causes (i) an increase or decrease in theSELLERs cost of performance of any part of the ConstructionWork (including costs relating to Subcontractors or SELLERs

suppliers) or (ii) an increase in the time required for the

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completion of the Construction Work, an equitable adjustmentin the Delivered Price and in the Target Completion Date, as thecase may be, shall be made in accordance with Article4.37.

(b) Notwithstanding the foregoing, no such adjustment to the DeliveredPrice or Target Comletion Date shall!

(i) be made to the extent that such suspension results fromthe SELLERs noncompliance with the requirements ofthis Contract;

(ii) be made to the extent that the completion of theConstruction Work would have been delayed orinterrupted by any other cause, including the fault ornegligence of the SELLER or its Subcontractor;

(iii) be made for any susension for which an adjustment isotherwise e"ressly made under another rovision of this

Contract or is otherwise e"ressly e"cluded under any otherrovision of this Contract; or

(iv) reflect any increase in cost other than reasonableincreases in the SELLERs actual cost of performing theConstruction Work and any actual reasonable increase inthe SELLERs cost that would not have occurred but forsuch suspension due to: (a) the SELLERs maintenance of,to the extent directed in the written Notice of Change, itsorganization and equipment committed to theConstruction Work in a standby status, (b) anydemobilization of the SELLERs plant, forces andequipment required by the suspension and (c) theSELLERs maintenance and protection of the portion ofthe Construction Work with respect to whichperformance has been suspended.

(c) In accordance with Article4.37.1(b), within twenty-one (21) daysof the SELLERs receipt of a Notice of Change from KSPCsuspending the performance of the Construction Work, theSELLER shall provide KSPC with written notice specifying theprojected increase or decrease, if any, in the cost of performingthe Construction Work which will be caused by the suspension.Furthermore, within twenty-one (21) days of the SELLERsreceipt of a notice from KSPC directing the SELLER to resume

performance of the suspended Construction Work, the SELLERshall provide KSPC, in accordance with Article4.37.1(b), withwritten notice specifying any deviations from the projectionsmade pursuant to the immediately preceding sentence in respectof the cost of performance of the Construction Work or the timerequired to complete the Construction Work caused by thesuspension.

4.35.3 Cumulative Suspension Right

If the SELLER has been suspended by KSPC from performing theConstruction Work for a cumulative period of one hundred (100) days

in the aggregate for a reason other than (i) the occurrence of Force

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Majeure or (ii) the occurrences specified in Article4.35.2(b), theSELLER shall be entitled to terminate this Contract and shall beentitled to all of its rights hereunder, provided that no period ofsuspension that is less than seven (7) consecutive days shall be countedtoward such 100 day period.

4.36 Change Orders

(a) A Change Order is a written instrument prepared by KSPC, or theSELLER and signed by KSPC and the SELLER stating their agreementupon a change in the Construction Work, the US dollar equivalent ofthe amount of the adjustment in Delivered Price, if any, and the extentof the adjustment in the Target Completion Date, if any. Changes in theConstruction Work shall only be accomplished by the writteninstrument described in the preceding sentence and executed by KSPCand the SELLER or the authorized representative of KSPC and theSELLER.

(b) Change Orders may be initiated at any time prior to the date of FinalCompletion, either by written instruction from KSPC in reply to aSELLER request or, in the case of a KSPC requested Change, by awritten request for the SELLER to submit a proposal (Notice ofChange). If KSPC requests the SELLER to submit a proposal andsubsequently elects not to proceed with the proposed change, theSELLER shall not be reimbursed for the cost incurred, unless otherwiseagreed in writing between KSPC and the SELLER.

(c) The SELLER shall not make any alteration or modification of theConstruction Work unless and until KSPC instructs the SELLER inwriting or approves, by authorized signature, a Change Order. If theSELLERs documents are not in accordance with this Contract, therejection of design or rectification of the SELLERs documents toconform to this Contract shall not constitute a Change Order.

(d) The SELLER shall have full responsibility for the design andimplementation of any Change Order which shall become part of theConstruction Work and shall be subject to all terms and conditions ofthis Contract as if the Change Order had originally formed part of theConstruction Work, unless specifically defined and agreed otherwise ina Change Order.

(e) No Change Order shall be issued in connection with the SELLERscorrection of any errors, omissions, deficiencies or improper or

defective Construction Work on the part of the SELLER or anySubcontractor.

4.37 Change Order Procedure

(a) Upon receipt by the SELLER of such written instruction as to a changein the Construction Work, the provisions of the following Articles4.37(b)through(g)shall apply.

(b) Within twenty-one (21) days of receipt of any KSPC directed Notice ofChange, the SELLER shall serve notice in writing on KSPC givingparticulars of the US dollar equivalent of any increase or decrease in

the Delivered Price and any adjustment in the Target Completion Date

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which the SELLER considers to be reasonably necessary as a directresult of the Change Order, if executed, as well as any othermodification of any provision of the Contract and, if appropriate,details of any unreasonable additional risk the SELLER believes it willencounter in complying with its obligations under this Contract as aconsequence of the implementation of the Change Order.

(c) For a period of twenty-one (21) days following receipt of the SELLERsnotice delivered pursuant to Article4.37(b)above, the SELLER andKSPC shall negotiate in good faith in an effort to agree on the amountof any such increase or decrease in the Delivered Price, adjustment tothe Target Completion Date and the modification of any provision ofthe Contract. In the case of a Change Order proposed by the SELLER,no change in the Target Completion Date or the Delivered Price shall bepermitted, except as expressly provided in Article4.35.1(b),#$%&orotherwise as agreed pursuant to this Article4.37.

(d) If at the end of the twenty-one (21) day period referred to in Article

4.37(c), no agreement has been reached between the SELLER andKSPC, then, within a further period of fourteen (14) days after suchperiod of twenty-one (21) days as the case may be, KSPC shall eitherserve a notice on the SELLER revoking KSPC-directed Notice ofChange or issue a written confirmation of the Notice of Change. In thecase of a SELLER proposed Change, if KSPC and the SELLER do notreach agreement within such time periods, either Party may refer thematter for resolution in accordance with Article17.3.

(e) Upon agreement between KSPC and the SELLER pursuant to Article4.37(c)or upon receipt of a confirmation referred to in Article4.37(d),the SELLER shall submit for the review of KSPC the SELLERsproposed (a) Design Documents which shall be subject to the review ofKSPC and (b) adjustments to the Delivered Price and the MajorMilestone Schedule.

(f) For any Change Order executed by the SELLER in accordance with thisArticle in respect of which no agreement has been reached regardingits effect on the Delivered Price or Target Completion Date pursuant toArticle4.37(d), the SELLER shall, if the Change Order is confirmed inwriting by KSPC, proceed with its execution notwithstanding theabsence of such agreement, and KSPC shall pay to the SELLER suchsum and award such extension of the Target Completion Date as may

be determined to be reasonable in the circumstances by the SELLERand KSPC or, failing that, in accordance with Article17.3. During the

pendency of the dispute, KSPC shall pay the SELLER monthly the USdollar equivalent of the actual costs incurred by the SELLER for theperformance of the Construction Work pursuant to such Change Order,which costs shall be substantiated by invoices submitted by theSELLER to KSPC. If the SELLER performs such Construction Workwithout agreement, an expert in accordance with Article17.3shall beentitled to consider the SELLERs reasonable (i) costs and expenses, (ii)overhead and (iii) profits, provided that such extension of the TargetCompletion Date and adjustment to the Delivered Price, if any, forcompletion of the Construction Work shall be reasonable under thecircumstances.

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(g) The requirements set forth in this Article are of the essence of thisContract. No course of conduct or dealing between the Parties, norexpressed or implied acceptance of Change Orders to the ConstructionWork shall form the basis of any claim for an increase in the DeliveredPrice or for a change in the Target Completion Date, unless a ChangeOrder has been signed and agreed by both KSPC and the SELLER. The

SELLER shall not be entitled to receive payment under a Change Orderuntil it has fulfilled all of the requirements of this Article4.37.

4.38 Construction Warranties

The SELLER warrants and represents to KSPC for the Warranty Period that:

(a) in normal commercial operation, the Facility will perform to thestandards stipulated in the specifications in the TechnicalSpecifications;

(b) all Construction Work intended for incorporation in the Facility has

been, or will be, designed and specified using Good EngineeringPractices;

(c) all Construction Work will be comprised only of materials, equipment,machineries and other goods which are new; all Construction Workshall have been carried out in accordance with the SELLERsobligations under this Contract and shall be free from defects in design,workmanship and material; and all workmanship, manufacture orfabrication shall be of internationally acceptable quality;

(d) all Construction Work comprising the Facility will, at the timesrequired by this Contract, successfully complete the Completion Testsand all other tests required in this Contract;

(e) the SELLER has used a period of not less than twenty five (25) years asthe basis for the design lifetime of all Construction Work intended forincorporation in the Facility in normal commercial operation.

(f) the Facility (including all items of Equipment) shall be designed andengineered to meet the requirements of this Contract and to produce afully-functioning Facility that is capable of operating free of majordefects for its design life in accordance with this Contract;

(g) the Facility will be designed to operate with a minimum ofmaintenance and interruption for maintenance if operated in

accordance with the O&M Manuals;

(h) at the completion of the Completion Tests, the Facility will beconstructed in accordance with the Design Documents submitted toKSPC, except as adjusted by a Change order;

(i) that the selected processes, methods of production and technology tobe incorporated in the Construction Work are at the date of thisContract an internationally acceptable standard, including standards ofhealth, safety and welfare; and

(j) all Construction Work complies with or, at the latest upon shipment

will comply with, all Applicable Laws and other requirements having

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The SELLER shall commence the provision of the Services on FinalCompletion .

5.4 General and Geographical Scope

(a) The SELLER shall provide all Services necessary for the operation and

maintenance of the Facility in accordance with this Contract.

(b) The obligations of the SELLER under thisArticle 5.shall apply to theLCF Site.

5.5 Standard of Conduct

The SELLER shall provide the Services and perform its other obligationsunder thisArticle 5.in accordance with:

(a) Good Operating Procedures;

(b) the instructions of KSPC;

(c) the O&M Manuals;

(d) the insurances of KSPC insofar as written details of the same have beensupplied to the SELLER by KSPC; and

(e) Applicable Laws and applicable Consents.

5.6 Owners Objectives

The SELLER shall act so as to:

(a) optimise the long term profitability of the Facility by means ofmaximising availability and efficiency and minimising the incidence,severity and duration of any outages (and costs relating to outages);and

(b) keep the Facility in good order and protect it from damage, prematuredeterioration or malfunction.

5.7 Conflict of Standards and Objectives

The SELLER shall notify KSPC immediately upon becoming aware of anyconflict:

(a) between any two or more of the requirements set out in Article5.5; or

(b) between any one or more of the requirements set out in Article5.5andany one or more of the requirements set out in Article5.6,

(c) and shall recommend to KSPC grounds for which requirement shouldprevail and for what action to take. The SELLER shall thereaftercomply with KSPCs instructions provided that, in so doing, theSELLER shall not be liable to the extent that KSPC has rejected theSELLERs recommendation. Any dispute may be referred to arbitrationfor resolution but, pending such resolution, KSPCs instructions shall

prevail.

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5.8 SELLER Consents and KSPC Consents

The SELLER shall at all times obtain and maintain all Consents required forthe operation and maintenance of the Facility which can only be obtained inSELLERs name and assist KSPC in obtaining Consents necessary, for theoperation and maintenance of the Facility excluding such Consents to be

obtained by the SELLER.

5.9 [Not Used]

5.10 Equipment, spare parts, and consumables

(a) The SELLER shall supply at its sole cost and expense all the equipment,spare parts and consumables necessary for the operation andmaintenance of the Facility (including maintaining appropriate levelsof inventory) in accordance with Good Operating Procedures.

(b) Title to all Equipment, spare parts and consumables supplied under

Article5.10shall pass to KSPC upon delivery to the LCF Site.

(c) Risk of loss in respect of Equipment, spare parts and consumables shallbe borne by the SELLER in accordance with Article4.30.

5.11 Personnel

(a) The SELLER shall provide suitably qualified, trained, experienced andcompetent personnel for the proper performance of the Services inaccordance with Good Operating Procedures.

(b) The SELLER shall at all times be responsible and liable for the welfareand all acts or omissions of its personnel and those of its Subcontractor.

(c) The SELLER shall at all times maintain strict discipline and good orderamongst its personnel and those of its Subcontractor on LCF Site.

5.12 Co-ordination with other O&M providers

The SELLER shall co-ordinate the provision of the Services with the provisionof services by the operation and maintenance provider in respect of the PowerPlant.

5.13 Reporting

5.13.1 Monthly reports

The SELLER shall provide KSPC with a monthly report within seven(7) days after the end of each month of the O&M Period, which reportshall include details of:

(a) delivered limestone and processed output;

(b) such other information as KSPC shall have reasonably requestedthe SELLER to provide; and

(c) any accident or other occurrence at the LCF Site that results in

injury to persons or damage to property.

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5.13.2 Annual reports

For each year in the O&M Period, the SELLER shall supply KSPC withan annual report for the previous calendar year within thirty (30) daysafter the end of such year, which report shall include:

(a) a detailed summary of the previous year's repairs andmaintenance;

(b) the amount of limestone delivered and processed outputs; and

(c) such other information or report as KSPC shall have reasonablyrequested the SELLER to provide.

5.14 Subcontracting

(a) The SELLER may subcontract part of the Services only with the priorwritten consent of KSPC.

(b) The subcontracting or delegation by the SELLER of the performance ofany of its obligations or duties shall in no way relieve the SELLER fromany of its duties, obligations or liabilities hereunder and the SELLERshall be fully responsible to KSPC for the acts and defaults of all itsSubcontractor as if they were its own.

5.15 Fines and Penalties

The SELELR shall bear any fines and penalties imposed on it or on KSPC forbreaching Applicable Laws in the performance of the Services but, in respectof those imposed on KSPC only, if such fines and penalties have been imposedas a result of the SELLER breaching the terms of this Contract.

5.16 Safety

The SELLER shall carry out the Services in compliance with all applicablesafety standards (whether contained in the Applicable Laws, O&M Manualsor elsewhere), and shall ensure that the Facility is operated in a manner safe toworkers, the general public and (within the design limits of the Facility) theenvironment.

5.17 Access to the Facility

(a) The SELLER shall procure that persons duly authorised by KSPC

(including representatives of the Lenders) shall have full and freeaccess to the Facility and the LCF Site at all reasonable times.

(b) The SELLER shall allow access to restricted areas of the Facility only tothose persons duly authorised to enter such areas.

5.18 Maintenance of Records and accounts

The SELLER shall keep complete and accurate records and accounts reflectingthe Facilitys operations in accordance with Applicable Laws and GoodOperating Procedures.

5.19 Monitoring Defects

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(a) The SELLER shall at all times monitor and inspect the condition of theFacility and shall notify KSPC without delay upon becoming aware ofany defect in the Facility and advise whether in its opinion, acting as aReasonable and Prudent Operator, it is a defect which the SELLER isobliged to remedy.

(b) In carrying out any works on or to the Facility the SELLER shallcomply with the requirements and instructions of the O&M Manuals.

5.20 Maintenance of Site

The SELLER shall maintain the LCF Site, and all improvements thereto in aproper, clean and orderly condition.

5.21 Environmental Hazards

(a) The SELLER shall not create any environmental hazards on the LCFSite nor shall the SELLER permit any environmental hazards to exist on

the LCF Site during the term of this Contract. For purposes of thisArticle5.21, "environmental hazards" shall mean any wastes or othersubstances or any environmental conditions which pose a substantialpresent or potential hazard to human health or the environment, andwhich are subject to regulation under any Applicable Laws relating tothe environment, but shall exclude any materials or substances(including, oils, water treatment chemicals and bottled gas) the use orstorage of which is necessary for the proper construction, testing,operation or maintenance of the Facility.

(b) If any environmental hazard is discovered for which the SELLER orany third party is responsible under Article5.21, the SELLER shall, atits sole expense and within reasonable time of discovery, remove orrender non-hazardous the environmental hazard and restore theaffected portion of the LCF Site as is reasonably practicable but only tothe extent required to comply with Applicable Laws.

(c) The provisions of this Article5.21(c)are without prejudice to KSPCsobligations under Article3.4.

(i) The SELLER shall properly store all wastes on-site. The SELLERshall not engage in treatment on-site of any waste classified ashazardous waste under any Applicable Laws and shall not storeany hazardous waste on the LCF Site for a period longer than[ninety (90)] days, or if lesser, the period permitted by any

Applicable Laws.

(ii) The SELLER shall arrange for Subcontractor of KSPC to removefrom the LCF Site and dispose off-site all wastes in such amanner as not to cause a nuisance or violate any ApplicableLaws. The contracts for such removal and disposal shall be inthe name of KSPC. The SELLER shall not be liable for the actsor omissions of such Subcontractor of KSPC after the waste has

been handed over to such Subcontractor.

(d) The SELLER shall be responsible for cleaning and restraining anyspillage or leakage on the LCF Site caused by the SELLER or those

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acting under its control and shall indemnify KSPC in respect of anyaspects arising with respect thereto.

(e) If the SELLER becomes aware of any environmental hazard on the LCFSite, it shall, as promptly as possible, give KSPC notice of such claim,including a reasonable detailed description of the facts and

circumstances relating to such claim and a complete copy of all noticesand any other documents related thereto.

5.22 Antiquities

The SELLER shall promptly notify KSPC of any antiquities, archaeologicalfinds, coins, relics and other valuables (collectively "Antiquities") that it isaware exist on the LCF Site and acknowledges that it shall have no propertyrights in respect of the same. The SELLER shall take all necessary precautionsto prevent the occurrence of any breakage or damage to such Antiquities.

5.23 Liens

The SELLER shall not suffer or permit any liens to be filed or enforced againstthe LCF Site by reason of work, labor, services or materials supplied orclaimed to have been supplied to the SELLER or on behalf of the SELLER. Ifany liens shall at any time be filed, the SELLER shall cause them to bedischarged or bonded within [30] days after service of notice of filing uponthe SELLER; provided, however, that any bond issued for any lien shall be in aform reasonably satisfactory to KSPC and with a surety which is reasonablyacceptable to KSPC. If the SELLER shall fail to procure such discharge or

bonding of such liens within such period, then, in addition to any other rightor remedy of KSPC, may, but shall not be obligated to, procure its discharge

by paying the amount claimed to be due or by deposit in court or by bonding.The SELLER shall be responsible for any amount paid by KSPC for any suchpurposes and for all other expenses of KSPC, including counsel fees, indefending any such action or procuring the discharge of such liens, and alldisbursements in connection therewith, with interest thereon.

Article 6. SELLERs Supply Obligations

6.1 Supply of Limestone

(a) The SELLER shall supply and deliver Limestone to KSPC withspecifications that conform to the Limestone Quality Specificationsoutlined inAppendix I, and such other standards as may be imposed

by Philippine laws on quality, safety, and environmental protection.

The Limestone shall be unloaded, handled, processed and stored at theFacility for delivery or transportation to the KSPCs Silo at the PowerPlant premises.

(b) KSPC shall give SELLER at least [30] days written notice of the date forfirst delivery of Limestone by SELLER (First Delivery Date). Forinformational purposes only, the estimated date of the First DeliveryDate is April 1, 2010.

6.2 Source of Limestone

(a) The SELLER shall enter into a contract for the supply of raw Limestone

materials with companies holding ownership and/or right to operate

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quarrying sites within three (3) months from the execution of thisContract.

(b) The Limestone to be supplied and sold by the SELLER and purchasedand received by KSPC under this Contract shall be supplied from atleast two (2) different Limestone quarrying sites.

(c) The SELLER shall furnish KSPC with a copy of the proposedagreement between the SELLER and such companies for the supply ofLimestone to KSPC, together with the operating history and financialperformance of such companies and any other information reasonablyrequested by KSPC within [2] months after the execution of thisContract.

(d) KSPC shall be entitled to review, among others, the proposedagreement, and operating history and financial performance of suchcompanies. If such companies fail to qualify in accordance withKSPCs standards, KSPC shall have the right to request and the

SELLER shall immediately undertake to procure another supplier in itsplace.

(e) If KSPC reasonably considers that the company which owns oroperates the quarrying site nominated by the SELLER, or the quarryingsite is no longer acceptable at anytime during the effectiveness of thisContract, and so notifies the SELLER, the SELLER shall promptlyprocure supply of Limestone from another company or quarrying sitein accordance with the procedure set out in Articles6.2.1(c)and6.2.1(d).

6.3 Quantity

The SELLER shall supply and sell to KSPC twenty-five thousand (25,000)metric tons of Limestone per Contract Year (Contract Quantity) asmeasured at the Delivery Point. The Contract Quantity for each Contract Yearmay be increased or decreased at any time by up to thirty percent (30%)thereof at the sole option of KSPC, without prior consultation with theSELLER. Such increase or decrease shall only apply to the Contract Year inrespect of which the option was exercised.

6.4 Quality

(a) All Limestone to be supplied by SELLER at the Delivery Point shallhave specifications falling within the limits of range as specified in

Appendix I. The SELLER shall use its best endeavors to ensure that theLimestone supplied hereunder conforms with the Guaranteed Qualityspecified inAppendix I.

(b) If KSPC considers that there is a substantial change in the quality ofsupplied Limestone leading to difficulties in using Limestone after theFirst Delivery Date, upon request of KSPC, the SELLER shall withoutprejudice to its obligations under Article6.4.1(a)make best endeavorsto improve the quality of Limestone for the subsequent deliveries,which include sourcing from alternative quarrying sites. Unlessimproved, this Contract may be terminated in accordance withArticle15..

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(c) KSPC may, from time to time, request from the SELLER certificates ofanalysis of the Limestone on a post-crushing basis. Determination ofthe quality of Limestone shall be made through sampling and analysisin accordance with the ASTM Standards to be conducted by the Minesand Geosciences Bureau of the Department of Energy and NationalResources of the Republic of Philippines. The costs required for the

determination of the quality shall be borne by KSPC.

6.5 Rejection

If the quality of Limestone delivered by the SELLER at the Delivery Point isoutside the limits of range as specified inAppendix I, KSPC shall have theright (in addition to any other rights which it may have under this Contractand by operation of law) to reject such Limestone.

6.6 Alternative sources

If the SELLER is unable to supply Limestone at the times, in the quantity and

of a quality required by this Contract, (including Limestone which were notdelivered on time or were rejected in accordance with Article6.5), KSPC mayprocure such Limestone from alternative sources. In such case, except to theextent excused by Force Majeure, the SELLER shall pay KSPC all cost incurred

by KSPC beyond the relevant Delivered Price that would have been payablehad such Limestone been supplied in accordance with this Contract.

6.7 Delivery er!s

The SELLER shall be responsible for arrangements of deliveries in accordancewith the requirements of this Contract. The SELLER shall deliver theLimestone to the Storage Silo upon un-loading and shall deliver the crushedLimestone to KSPCs Silo within the Power Plant premises.

6.8 Schedule of Delivery

The SELLER shall deliver the Contract Quantity in the amounts andquantities specified in KSPC's monthlyorders provided to the SELLERpursuant to Article6.9,6.11.1(c)hereunder during each Contract Year. Subjectto the foregoing, the SELLER shall evenly spread the Contract Quantitythroughout the Contract Year with allowances for adverse weather conditionsand shut-downs and maintenance periods of the Power Plant notified byKSPC to the SELLER.

6.9 Written Order

At least thirty (30) days prior to the commencement of each month from andincluding the month in which the First Delivery Date falls, KSPC shalltransmit to the SELLER its written order for Limestone to be delivered toKSPC during such month (Monthly Delivery Schedule). Withoutprejudice to its obligations hereunder to supply the Contract Quantity, shouldthe SELLER not be able to comply with the Monthly Delivery Schedule, itshall notify KSPC within three (3) days from receipt of the Monthly DeliverySchedule so as to discuss any possible adjustments regarding the same. If theParties do not agree such adjustments and the SELLER do not deliver inaccordance with KSPCs written order, the SELLER shall be liable for non-delivery (including late delivery) in accordance with this Contract.

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6.10 Make-up Obligation

(a) If the quantity of Limestone delivered at the Delivery Point in anymonth is less than the quantity required to be delivered under theMonthly Delivery Schedule for that month then, to the extent that suchshortfall is not due to KSPCs refusal (other than pursuant to Article

6.5) or inability to take delivery of the Limestone at the Delivery Pointor an event of Force Majeure hereunder, the amount of such shortfallshall be the "SELLER Shortfall" for that month.

(b) If KSPC believes that a SELLER Shortfall has occurred in any month,KSPC shall notify SELLER in writing within thirty (30) days after theend of the relevant month of the occurrence of and the amount of theSELLER Shortfall claimed by KSPC.

(c) If, within seven (7) days following the delivery of the notice of SellerShortfall referred to in Article6.10.1(b