Arkansas Administrative Code
Agency 168 - Arkansas Economic Development Commission
Rule 168.00.14-002 - Arkansas Energy Performance Contracting Program

Section 1.1. Definitions.

Certificate of Acceptance:

The certificate substantially in the form provided in Exhibit III(i) - Notice of Acceptance.

Contract:

This Energy Performance Contract and all Schedules, Exhibits, and Appendices attached hereto.

Contract Sum:

The sum of all materials, labor, auditing, design, engineering, Project construction management fees, overhead, profit, contingency, outside services, and bidding and construction contingencies related to the Project.

Savings:

Energy cost savings and operation and maintenance cost savings as allowed by A.C.A. § 19-11-1208 The Guaranteed Energy Cost Savings Act as revised by Act 554 dated 7/15/2013.The savings as provided in Schedule C and in accordance with the Savings Calculation Formula set forth in Schedule E.

Equipment:

The goods enumerated on Schedule A that is now or hereafter from time to time become attached hereto and incorporated herein by reference, together and with any and all additions, modifications, attachments, replacements and parts thereof.

Event of Default:

Those events described in Section 17.1and Section 17.2hereof.

Guarantee:

The savings achieved as a result of the installation and operation of the Equipment and provision of services provided for in this Contract as specified in Schedule D and in accordance with the Savings Calculation Formula as set forth in Schedule E.

Interim Period:

The period from contract execution until the Performance Commencement Date.

Maximum Contract Price:

The maximum amount of total allowable costs under this Contract, as set forth in Section 2.1,which shall be the total amount paid by the Agency, or Third-Party Lessor on behalf of the Agency, to Contractor.

Measurement and Verification (M&V):

The standards and definitions in the most current version if the International Performance Measurement and Verification Protocol (IPMVP) or if not applicable to a specific measure, the latest version of measurement and verification process of the Federal Energy Management Program (FEMP).

M&V Services:

Services relating to the measurement and verification by Contractor of the efficiency and effectiveness of the Project, pursuant to this Contract and the most current IPMVP or FEMP. document.

M&V Fee:

The annual fee according to Schedule Dfor M&V Services.

AEO Administration Fee:

The fee paid to AEO for administration of the AEPC Program, as authorized per Act 554, according to

Section 2.1: Purchase and Sale

The agreed to Contract Sum for the Work is a Maximum Contract Price of $[ Dollar Amount] as set forth in Schedule Q. Payment terms are described in Schedule N.

Contractor will provide the Work and all related services identified on Schedule Aand the services detailed on Schedule D, Schedule G, Schedule I, and Schedule L. Contractor shall supervise and direct the Work and shall be solely responsible for all construction means, methods, techniques, sequences, and procedures and for coordinating all portions of the Work under this Contract. Contractor shall be responsible to pay for all labor, materials, equipment, tools, construction equipment and machinery, transportation and other facilities and services necessary for the proper execution and completion of the Work.

The Contract Price includes the AEO Administration Fee, according to Schedule Q.

Section 2.2. Contractor Compensation - Construction Period.

Agency shall pay Contractor the Contract Sum in accordance with Schedule N. Payments will be made on a progress basis in accordance with Schedule N,for Work completed and authorized by Agency during the Construction Period. 5% Retainage will be withheld from each payment until the Notice of Final Acceptance has been executed by the Agency. Notice of Final Acceptance shall be executed by Agency upon written request by the Contractor unless Agency disputes in writing within 30 days of request. Professional Services shall not be subject to retainage. Upon Agency approval, Contractor may furnish a retention bond issued to the Agency at no cost to the Agency in lieu of retainage held.

Section 2.3. Cost Savings Guarantee.

Per the Arkansas Guaranteed Energy Cost Savings Act as revised by Act 554, Contractor hereby guarantees the level of energy cost savings and operations and maintenance costsavings as detailed in Schedule C. Contractor shall provide the M&V Services as defined in Schedule D, for every year of the contract term.

This Guarantee is achieved as a result of the installation and operation of the Equipment and provision of services provided for in this Contract as specified in Schedule Dand in accordance with the Savings Calculation Formula as set forth in Schedule E. The Guarantee per Schedule Cshall not be reduced even in the event of a Material Change per Article 14, except as the parties may mutually agree to such a reduction and act in good faith in determining such an agreement.

Section 2.4. Allowable Payment Sources.

Agency has pre-determined allowable cost repayment sources to be applied to annual payments, which shall include energy cost savings and operation and maintenance cost savings, water cost savings Allowable payment sources may also include material/commodity savings (including avoided cost from replacement lamps, ballasts, and scheduled replacement of parts). Future capital cost avoidance does not result in cost savings and is not allowed.

Section 2.5. Capital Contribution from Agency.

If applicable, in addition to the funds provided by the financing instrument described in Appendix A,Agency elects to make an capital contributions of $ Dollar Amount to pay for part of the initial cost as described in Schedule N.

Section 2.7. Annual Review and Reimbursement/Reconciliation.

Energy-related cost savings shall be measured and/or calculated as specified in Schedule D, Schedule E,and Schedule Eand a report provided within ninety (90) days of receipt of all data (as specified in Schedule Dhereof) for the previous year for each anniversary of the Performance Commencement Date. Contractor agrees that Schedule E shall follow and use as a standard the procedures and protocol for Measurement and Verification identified in this document. ESCO shall supply all post installation M&V reports to agency and AEO for approval.

In the event the Savings achieved during such Contract Year is less than the Guaranteed Utility and cost Savings (as defined in Schedule C hereof), set forth for such year during the years the Guarantee is in effect, Contractor shall pay the Agency an amount equal to the deficiency.

If during each Contract Year the Savings achieved are greater than the Guaranteed Savings, such excess Savings shall be retained by the Agency.

Section 2.8. Measurement Information Procedure.

When applicable, Savings shall be calculated [monthly, quarterly, or annually] in the following manner:

Section 2.9. M&V Fee.

Throughout the Term of this Contract, Agency shall pay Contractor an annual M&V Fee according to Schedule D for measuring the Savings. Annual guaranteed Savings achieved shall be sufficient to cover any and all fees to be paid to Contractor pursuant to the provisions of Schedule D. Notwithstanding the provisions in Section(s) 4.1, 4.2 and 4.3hereof, Agency shall not be required to begin any M&V Fee payments to Contractor under this Contract unless and until all equipment installation is completed by Contractor in accordance with the provisions of Article 6and Article 9, Schedule Gand Schedule L, and accepted by Agency as evidenced by the signed Notice of Final Acceptance as set forth in Exhibit III (iii), and unless and until said equipment is fully and properly functioning in accordance with Schedule Aand related details and specifications.

Section 2.10. Late Payment.

Payment during construction will be in accordance with Schedule N. Payment due during the Performance Period shall be due and payable within thirty (30) days of the invoice date. Interest shall accrue on payments not in dispute and rightfully owed for past due balance, owed to Agency hereunder at the rate of one percent (1%) per month (or the highest rate not prohibited by law, whichever is lower).

Section 3.1. Award Payments

ESCO shall engage all appropriate utility companies and reasonably apply all available rebates and incentives available from the utility to reduce the overall cost of the project. ESCO shall include a list and an estimate of all applicable utility rebates, local, state and federal rebates or tax incentives that will be sought to reduce the cost of the overall project. ESCO must show documentation with reasons stating why any incentives listed in the estimates are no longer available. Agency understands that amount might differ upon project completion based on availability.

Section 4.1. Construction Commencement Date and Time for Completion of Work.

Work must commence within thirty (30) days of execution of this Contract and shall be completed as set forth in Schedule F. The Time for Completion of Work is of the essence of this Contract. By executing this Contract, the parties hereto confirm the Time of Completion of Work is a reasonable period for performing the Work. Contractor shall not be responsible for any failure to fulfill, or any delay in fulfilling, its obligations hereunder, if such failure or delay is beyond the reasonable ability of such party to control, avoid or mitigate and is due to storm, flood, or other Act of Nature, or to fire, war, rebellion, scarcity of water, insurrection, riots, strikes (other than strikes directed at subcontractor), or is the result of some order, rule or regulation of any federal, state, municipal, or other governmental agency that could not have been reasonably anticipated or that was not scheduled to take effect. Time for Completion of the Work and the costs related thereto shall be extended and modified by Change Order, for such reasonable time and amount as the parties hereto may determine. In the event the delay exceeds sixty (60) calendar days, either party may terminate this agreement upon written notice.

Section 4.2. Performance Commencement Date.

The Performance Commencement Date shall be the first day of the month after the month in which all schedules are in final form and accepted by Agency and when Contractor shall have delivered a Notice to Agency that it has installed and commenced operating all of the Equipment specified in Schedule Aand in accordance with the provisions of Article 6and Schedule G, Agency has inspected and accepted said installation and operation as evidenced by the execution of the Notice of Final Acceptance as set forth in Exhibit III (iii).Notwithstanding anything to the contrary in Article 2and Article 4the Performance Commencement Date shall not occur and the Agency shall not be required to accept the work under this Contract unless and until: all Equipment installation for the subject Premises is completed by Contractor in accordance with the terms and conditions of this Contract. Agency shall have thirty (30) days after notification by the Contractor to inspect and accept the Equipment, file, in writing, any disputed issues, and execute Notice of Final Acceptance. Agency reserves the right to reject the Equipment if installation fails to comply with applicable building codes, or is otherwise not in compliance with this Contract.

Section 4.3. Performance Term of Contract.

The Performance Term of this Contract shall begin with the Performance Commencement Date and continue for the length of the financed term up to a maximum of 20 years, but may not exceed the cost-weighted average lifetime of the Equipment as calculated in Exhibit VI. Upon termination, Contractor shall be released from all obligations under the utility and cost Savings Guarantee. This Contract shall be effective and binding upon the parties immediately upon its execution. Savings achieved during the Construction Period shall not be applicable to the Guaranteed Savings.

Section 5.1. Energy Usage Records and Data

Agency has furnished and shall continue to furnish (or authorize its energy suppliers to furnish) during the Term of this Contract to Contractor or its designee, upon its request, all of its records and complete data concerning energy and water usage and related maintenance for the Premises.

Section 6.1. Permits and Approvals.

Agency shall use its best efforts to assist Contractor in obtaining all necessary permits and approvals for installation of the Equipment. In no event shall Agency, however, be responsible for direct payment of any permit or license fee or the delay of any such permit or license fee.

As directed by Agency, design documentation will be submitted to Agency for review. Agency agrees that the Agency review process will not be longer than 14 calendar days. As deemed necessary by Agency, design documentation will be forwarded by Agency to the appropriate code review Contractor for review. These costs of code review will be borne by Agency.

Section 6.2. Contractor's Duty of Proper Installation.

All services called for by this Contract which constitute the "practice of architecture" or the "practice of engineering", as those terms are defined in Arkansas Revised Statutes shall be performed by properly qualified and licensed professionals employed by Contractor and shall be performed in accordance with applicable law. Contractor shall perform all tasks/phases under this Contract, including construction, and shall install the Equipment in such a manner so as not to harm the structural integrity of the buildings or their operating systems and so as to conform to the standards set forth in Schedule Gand Schedule I.

Section 6.3. Use of Stated Project Percentages.

In establishing the Contract Sum the Contractor has used predetermined percentages of project price for overhead and profit as disclosed in the Contractor Proposal (Appendix C), as negotiated in the Contract for Investment Grade Audit and applied to the labor and material costs as shown in Schedule N. It has also provided a contingency equal to a percentage of the project budget. The Contract Sum shall be adjusted based on the actual direct costs to the Contractor, but in no event shall the Contract Sum be increased. In the event it is possible to reduce the Contract Sum because the actual labor and material costs are less than budgeted, the Agency can, at its sole option, increase the Work to include additional equipment such that the original Contract Sum is reached. If the Agency declines to increase the Work, at its sole option, the Contract Sum shall be reduced to an amount consistent with the pricing using the stated project percentages and the balance shall be applied to the lease financing amount.

Section 6.4. Open Book Pricing.

Open book pricing will be required, such that the Contractor will fully disclose all costs. Contractor will maintain cost accounting records on authorized work performed under actual costs for labor and material, or other basis requiring accounting records. Contractor will afford Agency access to these records and preserve them for a period of three (3) years after final payment. Costs will be evaluated through price analysis to compare costs with reasonable criteria such as established catalog and market prices or historical prices. Any evaluation of costs shall be the sole responsibility of the Agency. The pricing methodology and individual project percentage costing disclosed during preliminary contract negotiations will be expected to be applied, providing the scope and size of the Project remain the same as assumed when project percentage costing was disclosed.

Section 6.5. Administration.

The Contractor's contact person (Project Manager) shall forward all communications in writing and all documents to the Agency's contact person and the Program Manager's contact person simultaneously as listed below:

For the Agency: For the Program Manager:

For the Contractor Project Manager: For the Contractor Superintendent:

Section 7.1. Excluded Material and Activities.

Agency recognizes that in connection with the installation and/or service or maintenance of Equipment at Agency's Premises, Contractor may encounter, but is not responsible for, any work relating to (i) asbestos, materials containing asbestos, or the existence, use, detection, removal, containment or treatment thereof, or (ii) pollutants, hazardous wastes, hazardous materials, contaminants other than those described in this Section below (collectively "Hazardous Materials"), or the storage, handling, use, transportation, treatment, or the disposal, discharge, leakage, detection, removal, or containment thereof. The materials and activities listed in the foregoing sentence are referred to as "Excluded Materials and Activities". Agency agrees that if performance of work involves any Excluded Materials and Activities, Agency will perform or arrange for the performance of such work and shall bear the sole risk and responsibility therefore. In the event Contractor discovers Hazardous or Excluded Materials, Contractor shall immediately cease work, remove all Contractor personnel or subcontractors from the site, and notify the Agency. The Agency shall be responsible to handle such Materials at its expense. Contractor shall undertake no further work on the Premises except as authorized by the Agency in writing. Notwithstanding anything in this Contract to the contrary, any such event of discovery or remediation by the Agency shall not constitute a default by the Agency. In the event of such stoppage of work by Contractor, the Time for Completion of Work will be automatically extended by the amount of time of the work stoppage and any additional costs incurred by Contractor as a result will be added by Change Order.

Contractor shall be responsible for any hazardous or other materials, including, without limitation, those listed in this Section 7.1 that it may bring to the Premises.

Section 7.2. Polychlorinated Biphenyl (PCB) Ballasts; Mercury Lamps.

Contractor will enter into an agreement with an approved PCB ballast disposal Contractor who will provide an informational packet, packing receptacles and instructions, labels and shipping materials, transportation, and recycling or incineration services for PCB ballasts. All capacitors and asphalt potting compound materials removed from Agency's PCB ballasts will be incinerated in a federally approved facility. After proper disposal, a Certificate of Destruction will be provided by the approved facility to Agency. Contractor's responsibility shall be for the proper and legal management of any of Agency's PCB ballasts removed as a result of the installation of the Equipment and shall be limited only until said PCB ballasts are loaded onto an approved PCB ballast disposal Contractor's vehicle for transportation.

Contractor will enter into an agreement with an approved lamp disposal contractor who will provide approved containers, materials required to label, transportation, recycling or incineration in accordance with EPA requirements, and a copy of the manifest.

Agency agrees to sign manifests of ownership for all PCB ballasts and mercury lamps removed from the Premises.

Section 8.1. Modification of Schedules.

To ensure this Contract properly accounts for as-installed conditions, which conditions may vary from the pre-installation analyses, the Contractor shall re-validate or modify Schedule A andSchedule G prior to System Start-Up.

Section 8.2. Systems Startup and Equipment Commissioning.

The Contractor shall conduct a thorough and systematic performance test of each element and total system of the installed Equipment in accordance with the procedures specified in Schedule Gand prior to acceptance of the ECM by Agency as specified in Exhibit III (ii).Contractor agrees that Schedule Gshall follow and use as a standard the procedures and protocol for Commissioning located in the document Commissioning Guidelines for the Arkansas Energy Performance Contracting Program. Testing shall be designed to determine if the Equipment is functioning in accordance with both its published specifications and the Schedules to this Contract, and to determine if modified building systems, subsystems or components are functioning properly within the new integrated environment. The Contractor shall provide notice to the Agency of the scheduled test(s) and the Agency and/or its designees shall have the right to be present at any or all such tests conducted by Contractor and/or manufacturers of the Equipment. The Contractor shall be responsible for correcting and/or adjusting all deficiencies in the Equipment operation that may be observed during system commissioning procedures of Schedule G. Prior to Agency acceptance, Contractor shall also provide Agency with reasonably satisfactory documentary evidence that the Equipment installed is the Equipment specified in Schedule A.

Section 9.1. Ownership of Certain Proprietary Property Rights.

Agency shall not, by virtue of this Contract, acquire any ownership interest in any formulas, patterns, devices, secret inventions or processes, copyrights, patents, other intellectual or proprietary rights, or similar items of property which are or may be used in connection with the Equipment. Agency shall,

however, have a nonexclusive license to utilize all such intellectual or proprietary rights obtained by Contractor related to Equipment in connection with its use of the Equipment under this Contract. The Contractor hereby grants to the Agency a perpetual, royalty-free license to any and all software, plans, specifications or other intellectual property or proprietary rights it obtains from Equipment manufacturers necessary for the Agency to continue to operate, maintain, and repair the Equipment in a manner that will yield maximal energy consumption reductions. This license shall continue subsequent to any termination or expiration of this Contract other than termination due to breach by Agency.

Section 9.2. Ownership of Documents.

Section 9.3. Ownership of Existing Equipment.

Ownership of the equipment and materials existing at the Premises at the time of execution of this Contract shall remain the property of Agency even if it is replaced or its operation made unnecessary by work performed by Contractor pursuant to this Contract. If applicable, Contractor shall advise the Agency in writing of all equipment and materials to be replaced at the Premises and the Agency shall within days designate in writing to the Contractor which equipment and materials should not be disposed of off-site by the Contractor. It is understood and agreed to by both Parties that the Agency shall be responsible for and designate the location and storage for any equipment and materials that should not be disposed of off-site. Except as may be otherwise provided in this Contract, the Contractor shall be responsible for the disposal of all equipment and materials designated by the Agency as disposable off-site in accordance with all applicable laws and regulations regarding such disposal. Except as indicated in Section 7.1 and Section 7.2,, under no circumstance shall Contractor be obligated to dispose of or take responsibility for any materials identified in Section 7.1 or Section 7.2 of this Contract.

Section 9.4. Ownership of Measurement and Verification Equipment.

To the extent applicable, Agency agrees to provide and own the equipment required to provide the ongoing measurement of energy and water Savings which equipment shall comply with Contractor's specifications (the "Metering Equipment"). Upon mutual agreement between Contractor and Agency, Agency shall provide and maintain any necessary communication equipment to facilitate remote monitoring of the Equipment.

Section 10.1 Standards of Comfort.

Contractor will design and install the Equipment so that it is able to provide the standards of heating, cooling, ventilation, hot water supply, lighting quality and levels described in Schedule I. During the term of this Contract, Contractor and Agency will maintain, according to Schedule D, Schedule I and Schedule K, and operate the Equipment in a manner that will provide the standards of comfort and levels of operation as described in Schedule I.

Section 11.1 Actions by Contractor.

Contractor warrants that all equipment sold and installed as part of this Contract is new, unless otherwise agreed, will be materially free from defects in materials or workmanship, will be installed properly in a good and workmanlike manner, and will function properly for a period of one (1) year from the date of the Substantial Completion for the particular energy conservation measure if operated and maintained and kept free from damage in accordance with the procedures established per building. Substantial Completion shall be defined as the stage in the progress of the Work where the Work is sufficiently complete in accordance with the Contract Documents so that the Agency can utilize and take beneficial use of the Work for its intended use or purpose. Substantial Completion does not occur until the Equipment or system has been commissioned, accepted, and Exhibit III(ii) -Notice of Substantial Completion" is fully executed.

After the warranty period, Contractor shall have no responsibility for performing maintenance, repairs, or making manufacturer warranty claims relating to the Equipment, except as provided in Schedule D, Schedule I, and Schedule M.

Contractor further agrees to assign to Agency all available manufacturer's warranties relating to the Equipment and to deliver such written warranties and which shall be attached and set forth as Exhibit IV; reasonably assist Agency in its pursuit of its rights and remedies against the manufacturers under the warranties in the event of Equipment malfunction or improper or defective function, and defects in parts, workmanship and performance. Contractor shall, during the warranty period, notify the Agency whenever defects in Equipment parts or performance occur, which give rise to such rights and remedies and those rights and remedies are exercised by Contractor. During this period, the cost of any risk of damage or damage to the Equipment and its performance, including damage to property and equipment of the Agency or the Premises, due to Contractor's failure to exercise its warranty rights shall be borne solely by Contractor. However, these warranties do not extend to any damage as a result of Agency or third party neglect, modification, abuse or alteration.

All warranties, to the extent transferable, shall be transferable and extend to the Agency. The warranties shall specify that only new, not reconditioned, parts may be used and installed when repair is necessitated by malfunction.

Notwithstanding the above, nothing in this Section shall be construed to alleviate/relieve the Contractor from complying with its obligations to perform under all terms and conditions of this Contract and as set forth in all attached Schedules.

Section 11.2. Malfunctions and Emergencies.

Agency shall use its best efforts to notify the Contractor or its designated subcontractor within forty-eight (48) hours after the Agency's actual knowledge and occurrence of:

Section 11. 3.Actions by Agency.

During the term of this Contract, Agency shall not move, remove, modify, alter, or change in any way the Equipment or any part thereof without the prior written approval of Contractor except as set forth in Schedule K. Notwithstanding the foregoing, Agency may take reasonable steps to protect the Equipment if, due to an emergency, it is not possible or reasonable to notify Contractor before taking any such actions. In the event of such an emergency, Agency shall take reasonable steps to protect the Equipment from damage or injury. Agency agrees to maintain the Premises in good repair and to protect and preserve all portions thereof, which may in any way affect the operation or maintenance of the Equipment, all in accordance with the same standard of care the Agency applies to the Premises generally, that of a reasonably prudent government owner.

Section 12.1 . Modification of Equipment.

During the Term of this Contract, Agency will not, without the prior written consent of Contractor, alter, affix or install any accessory Equipment or device on any of the Equipment if such addition will change or impair the originally intended functions, value or use of the Equipment without Contractor's prior written approval, which shall not be unreasonably withheld.

Section 12.2. Upgrade or Alteration of Equipment.

Contractor shall at all times have the right, subject to Agency's prior written approval, which approval shall not be unreasonably withheld, to change the Equipment, revise any procedures for the operation of the Equipment or implement other energy saving actions in the Premises, provided that:

Section 13.1. Contractor Access.

Contractor acknowledges that there exists sufficient space on the Premises for the installation and operation of the Equipment. Agency shall take reasonable steps to protect such Equipment from harm, theft and misuse during the term of this Contract. Agency shall provide access to the Premises for Contractor to perform any function related to this Contract during regular business hours, or such other reasonable hours as may be requested by Contractor and acceptable to the Agency. Contractor shall be granted immediate access to make emergency repairs or corrections as it may, in its discretion, determine are needed. Contractor's access to the Premises to make emergency repairs or corrections as it may determine are needed shall not be unreasonably restricted by Agency. Contractor shall immediately notify the Agency when emergency action is taken and follow up with written notice with three (3) business days specifying the action taken, the reasons therefore, and the impact upon the Premises, if any.

Section 13.2. Utility Access.

If a Utility Award Payment is made as described in Section 3 (Utility Award Payments), the following applies. Upon request by the Utility (or its agent) and with prior consent of the Agency which consent shall not be unreasonably withheld, the Agency shall agree to allow Utility to interview the Agency and to enter the Premises at reasonable times throughout the life of the installed equipment to install metering equipment, perform energy audits or inspect the facilities and any equipment installed. The Agency also agrees to cooperate with the Utility or its agent upon request and with prior consent of the Agency, in conducting such activities and/or in analyzing Savings. At all times a representative of the Agency (or its agent) shall be present during such inspections.

Section 14.1. Material Change Defined.

A Material Change shall include any change or cumulative changes in or to the Premises, whether structural, operational or otherwise in nature which reasonably could be expected, in the judgment of the Agency, AEO and ESCO, to increase or decrease annual energy consumption in accordance with the provisions and procedures set forth in Schedule E and Schedule E after adjustments for climatic variations and provided a correlation exists between usage and Material Change.

Actions by the Agency that may result in a Material Change include but are not limited to the following:

Section 14.2. Reported Material Changes; Notice by Agency

The Agency shall use its best efforts to deliver to the Contractor a written notice describing all actual or proposed Material Changes in the Premises or in the operations of the Premises at least 14 days before any actual or proposed Material Change is implemented or as soon as is practicable after an emergency or other unplanned event. Notice to the Contractor of Material Changes which result because of a bona fide emergency or other situation which precludes advance notification shall be deemed sufficient if given by the Agency within five (5) business days after having actual knowledge that the event constituting the Material Change occurred or was discovered by the Agency to have occurred.

Section 14.3. Other Adjustments.

As agreed in Section 16.1 Agency will alert Contractor of materials changes as known. Both parties have a vested interest in meeting the Guaranteed Savings of the Contract. As such, the Contractor will work with Agency to investigate, identify and correct any changes that prevent the Guaranteed Savings from being realized. As a result of such investigation, Contractor and Agency shall determine what, if any, adjustments to the baseline will be made in accordance with the provisions set forth in Schedule E and Schedule E.

Section 15.1. Training.

The Contractor shall conduct the training program described in Schedule L. Appropriate training must be completed prior to acceptance of the Equipment installation. The Contractor shall provide ongoing training as defined in Schedule L.

Section 15.2. Application for Energy Star or LEED.

Upon request by Agency, the Contractor shall conduct investigation into any applicable certification program such as Collaborative for High Performance Schools, Energy Star Benchmark, US Green Building Council's Leadership in Energy and Environmental Design (LEED), etc. and facilitate requested certification process on behalf of Agency. Costs of such certifications will be borne by the Agency.

Section 15.3. Emissions Reductions Documentation and Reporting.

The Contractor shall include emissions reductions quantities in each annual report and advise the Agency on opportunities to achieve monetary benefit from such credits.

Section 16.1 Additional Insurance Requirements- Professional Liability Insurance.

Contractor promises and agrees to maintain in full force and effect a professional liability insurance policy that covers errors and omissions as is required for compliance with the Agency. The policy, including claims made forms, shall remain in effect for the duration of the Construction Period and for at least three one year beyond the completion and acceptance of the Equipment. The Contractor shall be responsible for all claims, damages, losses or expenses, including attorney fees, arising out of or resulting from the performance of professional services contemplated in this Contract, provided that any such claim, damage, loss or expense is caused by any negligent act, error or omission of the Contractor, any consultant or associate thereof, or anyone directly or indirectly employed by the Contractor. The Contractor shall submit a Certificate of Insurance verifying said coverage at the signing of this Contract and also any notices of renewals of Renewals of the said policy as they occur.

Section 17.1. Events of Default by Agency.

Each of the following events or conditions shall constitute an "Event of Default" by Agency:

Section 17.2. Events of Default by Contractor.

Each of the following events or conditions shall constitute an "Event of Default" by Contractor:

Section 17.3. Dispute Resolution

Section 18.1. Assignment by Contractor.

The Contractor acknowledges that the Agency is induced to enter into this Contract by, among other things, the professional qualifications of the Contractor. The Contractor agrees that neither this Contract nor any right of obligations hereunder may be assigned in whole or in part to another firm, without the prior written approval of the Agency except in the event that any third party acquires substantially all of the assets and obligations of Contractor, except as otherwise provided herein.

Section 18.2. Assignment by Agency.

Agency may transfer or assign this Contract and its rights and obligations herein to a successor government entity or agency with the consent of Contractor, which shall not be unreasonably withheld. The lack of financial qualification of the new owner shall be grounds for withholding such consent.

Section 19.1. General Representations and Warranties.

Each party warrants and represents to the other that:

Section 20.1. By Agency.

Agency hereby warrants, represents and promises that:

Section 20.2. By Contractor.

Contractor hereby warrants, represents and promises that:

Section 21.1. Waiver of Liens, Performance Bonds, Labor and Material Payment Bonds.

Such executed bonds are incorporated herein by reference as Exhibit I (Performance Bond) and Exhibit II (Labor and Material Payment Bond) per Schedule M (General Conditions; Article 26).

Section 21.2. Further Documents

The parties shall execute and deliver all documents and perform all further acts that may be reasonably necessary to effectuate the provisions of this Contract.

Section 21.3 Agency's Responsibilities.

Section 22.1 Conflicts of Interest.

Conflicts of interest relating to this Contract are strictly prohibited. Except as otherwise expressly provided herein, neither party hereto nor any director, employee or agent of any party hereto shall give to or receive from any director, employee or agent of any other party hereto any gift, entertainment or other favor of significant value, or any commission, fee or rebate in connection with this Contract. Likewise, neither party hereto nor any director, employee or agent of either party hereto, shall without prior notification thereof to the other party enter into any business relationship with any director, employee or agent of the other party or of any affiliate of the other party, unless such person is acting for and on behalf of the other party or any such affiliate. A party shall promptly notify the other party of any violation of this section and any consideration received as a result of such violation shall be paid over or credited to the party against whom it was charged. Any representative of any party, authorized by that party, may audit the records of the other party related to this Contract, upon reasonable notice and during regular business hours including the expense records of the party's employees involved in this Contract, upon reasonable notice and during regular business hours, for the sole purpose of determining whether there has been compliance with this section.

Section 23.1. IGA

Contractor prepared a complete Investment Grade Audit which has been approved and accepted by Agency as set forth in Exhibit III (i) - Notice of Acceptance - Investment Grade Audit and Measurement and Verification Plan.

Section 23.2. General Conditions.

The Agency's General Conditions are attached hereto as Schedule M and are incorporated into this contract.

Section 23.3. Order of Precedence.

Notwithstanding, the provisions of this Contract and the attached Schedules, Exhibits and Appendices shall govern in the event of any inconsistencies between the Investment Grade Audit and the provisions of this Contract.

In the event of conflicts or inconsistencies between this Contract and its Schedules, Exhibits or Appendices, such conflicts or inconsistencies shall be resolved by reference to the documents in the following order of priority:

In the event of any conflicts between Schedule C and other parts of this Contract regarding calculation or measurement of the Guarantee, Schedule C shall govern.

Section 23.4. Signatures.

Parties agree that facsimile or scanned signatures shall be accepted as originals.

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SCHEDULES

SCHEDULE A. EQUIPMENT TO BE INSTALLED BY CONTRACTOR

This schedule will be furnished by the Contractor based on the final Investment Grade Audit. The Investment Grade Audit is not the Scope of Work for this Contract, so all detail from the Investment Grade Audit as modified or amended in negotiations for this Contract should be included in this Schedule. It should specify all of the newly installed equipment including manufacturer, quantity, location and warranties (you can also have a separate schedule for warranties). The information should be provided in sufficient detail by building or area of building so that the Agency can verify the number of units installed under the contract. This is particularly important for a lighting retrofit and is used as the basis for making adjustments to the Contract Sum if the number of fixtures actually retrofit is different than the number estimated. Detailed specifications of major pieces of equipment such as boilers, chillers, motors should be provided. A detailed points list of any energy management control system should be provided along with the major control strategies being implemented. This schedule should also describe any modifications that may have to be made to existing equipment, if applicable.

SCHEDULE B.

DESCRIPTION OF PREMISES; PRE-EXISTING EQUIPMENT INVENTORY

This schedule is based on the final Investment Grade Audit. It contains basic information about the condition of the premises at the time of contract execution. The Investment Grade Audit is not an Attachment to this Contract, so all detail from the Investment Grade Audit as modified or amended in negotiations for this Contract should be included in this Schedule. Such information would include facility square footage, building construction, use, occupancy, hours of operation etc., and any special conditions that may exist.

The inventory is important to include for the purpose of identifying what equipment was in place and how it was configured at the time of contract execution. This schedule is important to the accurate establishment of baseline, savings measurement and may need to be referred to in the later years of the contract. It is critical that if M&V option C of the Measurement and Verification Guidelines for the Arkansas Energy Performance Contracting Program is used for establishing the savings, then a detailed list of the existing energy consuming equipment of the facility be documented in great detail. If Option A or B is used, then the pre-existing equipment inventory can be eliminated.

SCHEDULE C:

UTILITY AND COST SAVINGS GUARANTEE

This schedule should fully describe all provisions and conditions of the energy saving guarantee provided by the Contractor. The guarantee should be defined in units of energy to be saved for the duration of the contract term and dollar savings. Reference to the annual reconciliation of achieved vs. guaranteed savings should be included (there is also language in the body of the contract regarding annual reconciliation See Section 2.7 Annual Review and Reimbursement/Reconciliation).

This schedule should contain the projected energy savings in units for each year of the contract. Often these Projections are broken down on a measure-by-measure basis, although some measures may be aggregated into general categories such as lighting or HVAC. If there are several buildings involved in the Project, this schedule should contain Projections for each facility, even though they may all be covered under a single guarantee. ESCO shall use the standard reporting format developed by AEO.

SCHEDULE D:

CONTRACTOR M&V, MAINTENANCE AND SERVICE AGREEMENT

This should contain the amount and frequency of any payments that may be made to the Contractor for maintenance, M&V or other services negotiated as part of the contract. It should contain information about how the compensation is calculated (e.g. a percentage of savings above and beyond the guarantee, flat fee etc.), and if an annual inflation index is to be used to escalate fees over the duration of the contract term. An hourly fee structure can also be included to cover Contractor costs for any services provided beyond the scope agreed to at the time of contract execution.

SCHEDULE E:

MEASUREMENT AND VERIFICATION PLAN INCLUDING BASELINE ENERGY CONSUMPTION, SAVINGS

MEASUREMENT AND CALCULATION FORMULAE, METHODOLOGY TO ADJUST BASELINE

The baseline energy consumption is the "yardstick" by which all savings achieved by the installed Project will be measured. The methodology and all supporting documentation used to calculate the baseline should be in this schedule including unit consumption and current utility rates for each fuel type. This schedule may also include baseline documentation regarding other cost savings such as material savings (e.g. bulbs, ballast, filters, chemicals etc.), and cost savings associated with the elimination of outside maintenance contracts. >

< For each site or Project, the baseline and post-installation energy use will usually be defined using metering, billing analysis and/or engineering calculations (including computer simulations) either individually or in combination. In addition, values for certain factors that affect energy use and savings that are beyond the Contractor's control may be stipulated using historical data, analyses and/or results of spot or short-term metering. The owner or the Contractor can define baseline conditions. If the owner defines the baseline, the Contractor will have the opportunity to verify it. If the baseline is defined by the Contractor, the owner will have the opportunity to verify.

Baseline physical conditions (equipment inventory and conditions, occupancy, nameplate data, energy consumption rate, control strategies, etc.) are typically determined through well-documented audits, surveys, inspections and/or spot or short-term metering. This documentation will define the baseline for calculating savings and document baseline conditions in case future changes require baseline energy use adjustments.

This schedule contains a description of the energy savings M&V plan and calculation procedures used to verify and compute the savings performance of the installed equipment will be contained in this

schedule. Contractor agrees to use as the standard, the procedures and protocol for the most current version if the International Performance Measurement and Verification Protocol (IPMVP) or if not applicable to a specific measure, the latest version of measurement and verification process of the Federal Energy Management Program (FEMP)as the basis of the savings calculation methodology, and to use the M&V report developed by AEO. This protocol provides four options for M&V and covers all possible energy and water efficiency measures and is based on the accepted international standard for M&V of performance contracts.

This calculation will include a method to compare the level of energy that would have been consumed without the Project (referred to as the "Baseline") with what amount of energy was actually consumed during a specific time period (monthly, quarterly, etc.). All methods of measuring savings including engineered calculations, metering, equipment run times, pre- and post-installation measurements, etc. should be explicitly described for all equipment is installed. A post-installation report is required.

A clear methodology for converting energy savings into energy cost savings should be provided. The utility rates to be used for the baseline and actual energy costs should be defined. How the calculations are affected by rising or lowering utility rates should be clearly described.

Periodically (typically on an annual basis), the baseline will be adjusted to account for the prevailing conditions (e.g., weather, billing days, occupancy, etc.) during the measurement period. All methodologies used to account for any adjustments to the baseline needs to be clearly defined in this schedule.

Examples of baseline adjustments include: change in the amount of space being air conditioned, changes in auxiliary systems (towers, pumps, etc.), and changes in occupancy or schedule. For example, if a chiller retrofit was completed in a building with 100,000 square feet of conditioned space and during the contract term the conditioned space is reduced to 75,000 square feet, post-installation energy use would be lower making savings higher. If there are no records of the amount of originally conditioned space, the baseline could not be adjusted. Baseline adjustments for issues such as changes in production shifts, facility closures, adding new wings or loads (such as computer labs) require a conceptual approach versus a method to cover each eventuality. Clearly predictable annual variations are usually handled through established procedures for each identified factor in the savings formulas. Permanent changes, such as changes in square footage, are handled through agreement clauses that allow predictable or expected changes and/or through a "re-open" clause that allows either party to renegotiate the baseline.

A Facility Changes Checklist or other method may be provided by the Contractor for the Agency to notify the Contractor of any changes in the facility that could have an impact on energy use (occupancy, new equipment, hours of use, etc.). This checklist is generally submitted on a monthly or quarterly basis.

SCHEDULE F:

CONSTRUCTION AND INSTALLATION SCHEDULE

The timetables and milestones for Project construction and installation should be contained in this schedule. Any penalties for late installation should also be documented here. Documentation of required insurance, sub-Contractor lists and any MBE/WBE required subcontracts can be included in this schedule or broken out into a separate schedule. NOTE: It is important that the construction/installation phase of the Project (for example bonds and insurance) be treated in compliance with individual institutional requirements and the appropriate governing statutes. Since construction is just one component of the overall Project, a separate construction contract may be desirable and in some cases necessary. The construction contract would then be referred to in the body of the contract and attached as an exhibit, appendix or other type of attachment. Another approach would be to consolidate the appropriate construction language for inclusion in the body of the final contract. This will need to be decided as appropriate on a case-by-case basis.

SCHEDULE G:

SYSTEMS START-UP AND COMMISSIONING; OPERATING PARAMETERS OF INSTALLED EQUIPMENT

This section should specify the performance testing procedures that will be used to start-up and commission the installed equipment and total system. The schedule also provides for the Agency to be notified of and have the right to be present during all commissioning procedures. This schedule should contain a provision for the documentation of the client's attendance at the various tests and acceptance of the Contractor's certification that the tests followed the specified procedures and met or exceed the expected results. Use of manufacturer's start up and performance sheets are required. Contractor shall also use and adhere to the Commissioning Guidelines for the Arkansas Energy Performance Contracting Program, on the AEO website during all aspects of commissioning for this Contract.

The operating parameters should contain any specified parameters for the operation of the installed equipment such as temperature setbacks, equipment run times, load controlling specifications and other conditions for the operation of the equipment.

SCHEDULE H:

STANDARDS OF COMFORT

The standards of comfort to be maintained for heating, cooling, lighting levels, hot water temperatures, humidity levels and/or any special conditions for occupied and unoccupied areas of the facility should be explicitly described in this schedule.

SCHEDULE I:

CONTRACTOR'S MAINTENANCE RESPONSIBILITIES

A complete description of the Contractor's specific operations and maintenance responsibilities should be included in this schedule along with the time intervals for their performance of the stated O&M activities (through Acceptance, through Performance Term, etc.).

SCHEDULE J:

AGENCY'S MAINTENANCE RESPONSIBILITIES

This schedule describes the operations and maintenance responsibilities that may be assigned to facility staff as agreed to by both parties. In some instances it will contain no more than a description of routine O&M currently being performed on existing energy consuming equipment in the facility. In other cases, facility staff may be used to provide some maintenance on the new equipment installed under the performance contract, with the Contractor providing any specialized services as needed.

SCHEDULE K:

FACILITY MAINTENANCE CHECKLIST

This checklist is a method by which the Contractor may record and track compliance with operations and maintenance procedures performed by facility personnel. The checklist typically specifies simple list of tasks and the corresponding schedule for the performance of the prescribed procedures. Facility staff will complete the checklist and forward it to the Contractor, usually on a monthly basis. (This checklist is a very useful tool for both the Contractor and Agency to verify that the required maintenance activities are being performed at the scheduled intervals). It could be stated here that the checklist will be provided as a part of the Operation and Maintenance Manuals.

SCHEDULE L:

CONTRACTOR'S TRAINING RESPONSIBILITIES

The description of the Contractor's training program or sessions for facility personnel should be contained in this schedule. The duration and frequency of the specified training should also be included. Any provisions for on-going training, commitments to train newly hired facility personnel, and training with respect to possible future equipment or software upgrades should also be described. Any fees associated with requests for training beyond what the Contractor is contractually bound to provide should also be specified.

SCHEDULE M:

GENERAL CONDITIONS

These General Conditions required by Arkansas state government shall apply for all state agencies and institutions. Additional terms and conditions may be required by the Arkansas Office of State Procurement.

1. MINORITY BUSINESS POLICY: Minority participation is encouraged in this and in all other procurements by state agencies. Minority is defined by Arkansas Code Annotated § 15-4-303 as a lawful permanent resident of this state who is: African American, Hispanic American, American Indian, Asian American, Pacific Islander American or a Service Disabled Veteran as designated by the United States Department of Veterans Affairs. The Arkansas Economic Development Commission conducts a certification process for minority business. Bidders unable to include minority-owned business as subcontractors "may explain the circumstances preventing minority inclusion".

Check minority type:

African American___ Hispanic American___ American Indian___ Asian American___ Pacific Islander American___ Service Disabled Veteran___ Arkansas Minority Certification Number _________________

1. EQUAL EMPLOYMENT OPPORTUNITY POLICY: In compliance with Arkansas Code Annotated § 19-11-104, the Office of State Procurement is required to have a copy of the vendor's Equal Opportunity Policy prior to issuing a contract award. EO Policies may be submitted in electronic format to the following email address: eeopolicy.osp@dfa.arkansas.gov, or as a hard copy accompanying the solicitation response. The Office of State Procurement will maintain a file of all vendor EO policies submitted in response to solicitations issued by this office. The submission is a one- time requirement, but vendors are responsible for providing updates or changes to their respective policies, and for supplying EO policies upon request to other state agencies that must also comply with this statute. Vendors that do not have an established EO policy will not be prohibited from receiving a contract award, but are required to submit a written statement to that effect.

2. VISA ACCEPTANCE: Awarded contractors should have the capability of accepting the State's authorized VISA Procurement Card (p-card) as a method of payment. Price changes or additional fee(s) may not be assessed when accepting the p-card as a form of payment. The successful bidder may receive payment from the State by the p-card in the same manner as other VISA purchases. VISA acceptance is preferred but is not the exclusive method of payment.

3. EO-98-04 GOVERNOR'S EXECUTIVE ORDER: Bidders should complete the Disclosure Forms found on the Arkansas Office of State Procurement website: http://www.dfa.arkansas.gov/offices/accounting/internalaudit/Pages/ExecutiveOrd er98-04.aspx

4. CURRENCY: All pricing must be United States dollars and cents.

5. GUARANTY: All items provided under the contract shall be newly manufactured, in first-class condition, latest model and design, including, where applicable, containers suitable for shipment and storage, unless otherwise indicated in the bid invitation. The contactor hereby guarantees that everything furnished hereunder will be free from defects in design, workmanship and material, that if sold by drawing, sample or specification, it will conform thereto and will serve the function for which it was furnished. The contractor further guarantees that if the items furnished hereunder are to be installed by the bidder, such items will function properly when installed. The contractor also guarantees that all applicable laws have been complied with relating to construction, packaging, labeling and registration. The contractor's obligations under this paragraph shall survive for a period of one year from the date of delivery, unless otherwise specified herein.

6. STATE PROPERTY: Any specifications, drawings, technical information, dies, cuts, negatives, positives, data or any other commodity furnished to the contractor hereunder or in contemplation hereof or developed by the contractor for use hereunder shall remain property of the state, be kept confidential, be used only as expressly authorized and returned at the contractor's expense to the F.O.B. point properly identifying what is being returned.

7. PATENTS OR COPYRIGHTS: The contractor agrees to indemnify and hold the State harmless from all claims, damages and costs including attorneys' fees, arising from infringement of patents or copyrights.

8. ASSIGNMENT: Any contract entered into pursuant to this invitation for bid is not assignable nor the duties thereunder delegable by either party without the written consent of the other party of the contract.

9. LACK OF FUNDS: The state may cancel this contract to the extent funds are no longer legally available for expenditures under this contract. Any delivered but unpaid for goods will be returned in normal condition to the contractor by the state. If the state is unable to return the commodities in normal condition and there are no funds legally available to pay for the goods, the contractor may file a claim with the Arkansas Claims Commission. If the contractor has provided services and there are no longer funds legally available to pay for the services, the contractor may file a claim.

10. DISCRIMINATION: In order to comply with the provision of Act 954 of 1977, relating to unfair employment practices, the bidder agrees that:

11. ANTITRUST ASSIGNMENT: As part of the consideration for entering into any contract pursuant to this invitation for bid, the bidder named on the front of this invitation for bid, acting herein by the authorized individual or its duly authorized agent, hereby assigns, sells and transfers to the State of Arkansas all rights, title and interest in and to all causes of action it may have under the antitrust laws of the United States or this state for price fixing, which causes of action have accrued prior to the date of this assignment and which relate solely to the particular goods or services purchased or produced by this State pursuant to this contract.

12. DISCLOSURE: Failure to make any disclosure required by Governor's Executive Order 98-04, or any violation of any rule, regulation, or policy adopted pursuant to that order, shall be a material breach of the terms of this contract. Any contractor, whether an individual or entity, who fails to make the required disclosure or who violates any rule, regulation, or policy shall be subject to all legal remedies available to the agency.