Common use of Summary of Facts Clause in Contracts

Summary of Facts. The Ivanpah solar power complex will consist of three solar thermal power generation projects. Each project company owns one of the projects. At the moment, the project companies are wholly owned by BrightSource Energy, Inc. (“BSE”). Each is a disregarded entity for federal income tax purposes. BSE may sell down its interest in a holding company to which it will contribute the membership interests in the project companies. BSE expects this holding company to be treated as a partnership for federal income tax purposes, upon such a sell-down. BSE intends to restrict ownership of the holding company (initially and going forward) to entities that would be eligible to receive a cash grant themselves had they owned a project directly. Each project company would continue to be a disregarded entity for federal income tax purposes. Project I is intended to have a gross capacity of 126 MW. Each of project II and project III is intended to have a gross capacity of 133 MW. Each project will consist of thousands of heliostats in a solar field that will reflect and concentrate solar radiation onto a central point in a “power tower.” At the top of the tower, there is a boiler system. The concentrated solar radiation will heat water to generate superheated and pressurized steam. The steam will be used to power a standard steam turbine generator to produce electricity. All three projects will be located on a 3600 acre site controlled by the Bureau of Land Management and that is just west of the Ivanpah dry lake in Southern California. The projects also will use certain common equipment that is located on the same site in a “common area.” Each project company will own a direct and undivided interest in this common equipment that is based on its expected percentage of use. The construction of each project principally requires the delivery and installation of heliostats, a boiler system, a conventional steam turbine generator set and a control system that will compute the optimal positioning of the heliostats to provide the boiler system with the required intensity and distribution of light to optimize steam output. Cash Grant Opinion - Ivanpah 3 April 5, 2011 CONSTRUCTION CONTRACT STRUCTURE The construction contract structure for each project is the same. There are two principal contractors building each of the projects: (i) BrightSource Construction Management, Inc. (“BSCM”) and (ii) Xxxxxxx Power Corporation (“Bechtel”). BSCM is a US subsidiary of BSE and both are included in a group of corporations that file a consolidated federal income tax return. Each project will enter into a contract with BSCM for certain solar field design and engineering services and the supply of the solar receiver steam generator that Bechtel will use in the project’s construction. The major equipment subcontract under each solar field agreement is a solar receiver steam generator supplied under a supply contract with Xxxxx Power Inc. The project company then will provide equipment supplied under the subcontract to Bechtel for incorporation into the project. Each project company has entered into an equipment and construction contract with Bechtel for the purchase, installation, assembly and, in some cases, commissioning of equipment provided by the project company as well as procurement and construction of the balance of plant. Under a “common projects agreement” with all three project companies, Bechtel will construct the property in the common area and perform certain other site work. The work under this contract will include, among other things, construction of: (i) plant roads and paths, (ii) a water system with two permanent xxxxx of up to 1,000 feet in depth to supply water to the projects and heliostat assembly area, (iii) 33KV power distribution lines from five Southern California Edison overhead interfaces to the common facilities, (iv) heliostat assembly building, (v) construction power transformers in the common area, (vi) station transformers and construction power transformers in the projects and (vii) relocation and paving of a public access road. Road construction includes clearing, grading, grubbing and excavation of the plant roads. A public road (Colosseum Road) enters the area in which all three projects are located from Xxxxx Well Road (just West of Interstate 15 South of the Primm Valley Country Club) and proceeds West through such area. The project companies intend to use this road to transport equipment used in the projects and to operate and perform maintenance for the projects. The site design requires Bechtel to reconstruct portions of this road and reroute others to the South and through the common area. Four spurs will Cash Grant Opinion - Ivanpah 4 April 5, 2011 be constructed off of this access road. Three run from the common area to the various projects and will be used for delivery of equipment and maintenance of the facilities. One of the three roads runs South through the common area past a temporary heliostat assembly building and to project I’s power block. The project companies intend this road to be part of a road network in the common area that will be used to transport equipment used in the projects and to operate and perform maintenance of the projects. The fourth also will be part of the common area road network; it will run through the common area to the switchyard, the xxxxx and an administration building. The roads will be paved with asphalt and will be approximately 20 feet wide, with 3 foot shoulders on either side. In addition, the project companies collectively have entered into a master services contract with Bechtel, dated as of August 14, 2009 and amended and restated on July 23, 2010. Under this agreement, Bechtel will provide design, engineering, and procurement services for all three projects. The major equipment supply subcontracts under each equipment and construction contract with Bechtel will be: (i) a steam turbine supply contract for each project with either Siemens Industrial Turbomachinery, Inc. or Siemens Energy, Inc. for the supply of a standard steam turbine and generator set and (ii) a solar field supply subcontract between Bechtel and BrightSource Operations (Israel), Ltd. (“BSOI”), an Israeli subsidiary of BSE, for the supply of certain solar field equipment, consisting principally of heliostats and related equipment, documentation and services. Siemens initially entered into individual turbine supply agreements with each project company; however, these will be assigned to Xxxxxxx. CONSTRUCTION PROCESS Bechtel commenced work under the common projects agreement during the first week of October 2010 under a limited notice to proceed, and among other things has begun: