EXHIBIT 4.1
TRANSLATION
NUMBER OF CONTRACTPIF 005/2003
MIXED FINANCED PUBLIC WORKS CONTRACT
BETWEEN
COMISION FEDERAL DE ELECTRICIDAD
AND
CONSTRUCTORA INTERNACIONAL DE INFRAESTRUCTURA, S.A. DE C.V.
DATED ON MARCH 26, 2003
i
INDEX
CLAUSE 1. DEFINITIONS AND REFERENCES
1.1 Definitions
1.2 Singular and Plural
1.3 Headings and References
CLAUSE 2. PURPOSE OF THE CONTRACT
CLAUSE 3. ADDITIONAL REPRESENTATIONS AND WARRANTIES
3.1. Representation and Warranties by Commission
3.2 Representations and Warranties by Contractor
CLAUSE 4. SCOPE OF OBLIGATIONS FOR CONTRACTOR
4.1 Basic Obligations
4.2 Implicit Obligations
4.3 Considerations and Additional Factors.
4.4 Specifications of the Contract.
4.5 Applicable Laws.
4.6 Financing
4.7 Permits and Surveys
4.8 Import Taxes; Customs Duties.
4.9 Record Book.
4.10 Contractor's Obligations concerning Safety, Hygiene, the Environment
and Civil Protection
4.11 Development, Implementation and Maintenance of the Quality Assurance
System and of the Environmental
ii
Management System and the Industrial Safety System (SACPASI).
4.12 Immigration Matters
4.13 Domestic Integration
4.14 Labor Obligations
CLAUSE 5. SITE INSPECTION; REVISION OF DOCUMENTS
5.1 Site Inspection
5.2 Revision of Documents
5.3 No Release from Responsibility
5.4 Use of Site
CLAUSE 6. OTHER OBLIGATIONS FOR COMMISSION
6.1 Access to the Site
6.2 Permits
6.3 Issue of Acceptance Certificates
6.4 Cooperation in Executing the Project
6.5 Documents to Facilitate Financing
6.6 Payment of Contract Price or Termination Value
6.7 No Additional Obligation
6.8 Supply of Electricity
CLAUSE 7. REPRESENTATIVES OF THE PARTIES
7.1 Commission's Representatives
7.2 Change of Commission's Representatives
7.3 Project Manager and Contractor's Construction Superintendent
7.4 Change of Project Manager and Construction Superintendent
CLAUSE 8. CONSULTING COMMITTEE
CLAUSE 9. CONTRACT PRICE
9.1 Contract Price Amount
9.2 Payment of the Contract Price
9.3 Variations in Works
iii
CLAUSE 10. PAYMENT
10.1 Payment Form
10.2 Financial Expenses
10.3 Invoice and Value Added Tax
10.4 Surplus Payments
10.5 Documents Related to Eximbank Sources of Financing or other Export
Credit Agencies (ECA'S)
10.6 Right to Compensation
10.7 Withholdings
CLAUSE 11. ADJUSTMENT IN COSTS
CLAUSE 12. EXECUTION WARRANTY; QUALITY WARRANTY
12.1 Delivery of Warranties
12.2 Form and Duration
12.3 Collection of Warranties
CLAUSE 13. SCHEDULE FOR WORKS EXECUTION
13.1 Start and Development According to the Execution Schedule
13.2 Coordination Procedure
13.3 Adjustments in Critical Event Dates
13.4 Monthly Advance Reports
13.5 Additional Measures
13.6 Damage because of Delays
13.6.1 For the Lump-Sum Price part of the Contract
13.6.2 For the Unit Prices part of Contract
13.7 Payment of Penalty
13.8 Collection of Penalties
13.9 Non-Release from Liability
CLAUSE 14. ENGINEERING
14.1 Development of Engineering
14.2 Delivery and Proprietorship of Engineering
CLAUSE 15. MATERIALS AND MAIN EQUIPMENT
iv
15.1 Supply of Materials and Main Equipment
15.2 Quality
15.3 Purchase Orders
15.4 Selecting Suppliers
15.5 Transporting and Importing Materials and Main Equipment
CLAUSE 16. INSPECTION AND TESTS OF MATERIALS, OF MAIN EQUIPMENT AND OF THE
WORKS
16.1 Inspection and Tests
16.2 Access
16.3 Inspection and Reports Schedule
16.4 Contractor's Obligations During Inspections and Tests
16.5 Rejection of Faulty Materials, Main Equipment and Systems
16.6 Covering the Works
16.7 Substitution of Faulty Materials, Main Equipment or Works
16.8 Default of Instructions
16.9 Non-Release from Responsibility
CLAUSE 17. CONSTRUCTION
17.1 Responsibility for Construction
17.2 Establishing the Works
17.3 Cleaning of the Site
17.4 Inspection and Supervision
17.5 Damage to Commission or Third Parties
CLAUSE 18. TESTS
18.1 Putting into Service Tests
18.2 Operating Tests
18.3 Performance Tests
18.4 Tests Schedule
v
18.5 Personnel
18.6 Contractor's Responsibility and Obligations
18.7 Charges on Delays
18.8 Interruptions Attributable to Contractor
18.9. Other Interruptions
18.10 Unsatisfactory Results
18.11 Rejection of the Works
18.12 Repair or Replacement of the Works
18.13 Damage to the Environment
CLAUSE 19. ACCEPTANCE
19.1 Provisional Acceptance
19.2 No Release from Liability
19.3 Removal of the Contractor's Equipment
19.4 Minor Faults
19.5 Unsatisfactory Performance
19.6 Final Acceptance
CLAUSE 20. TECHNICAL SUPPORT AND TRAINING
20.1 Support Prior to Putting into Service
20.2 Support From the Provisional Acceptance
CLAUSE 21. WARRANTIES AND WARRANTY PERIOD
21.1 Execution Warranty
21.2 Performance Warranties
21.3 Access to the Site
21.4 Expansion of the Warranty Period
21.5 Replacement during the Warranty Period
21.6 Default by the Contractor to Make Replacements
21.7 Warranties from the Subcontractors
21.8 Claims against Subcontractors and Suppliers
21.9 Limitations of the Warranties
21.10 Release of Warranties
21.11 Maximum Applicable Limits to Contractual Penalties
vi
CLAUSE 22. CONTRACTOR'S PERSONNEL AND EQUIPMENT AT THE SITE; SUPPLY OF SPARE
PARTS
22.1 Experienced Personnel
22.2 SUTERM
22.3 Other Obligations of the Contractor
22.4 Contractor's Equipment
22.5 Spare Parts Delivery Conditions
22.6 Acceptance
22.7 Quality of the Spare Parts
CLAUSE 23. INDEMNITY
CLAUSE 24. INSURANCE
24.1 Insurance Against All Risks
24.2 Civil Liability Insurance
24.3 Waiver of subrogation
24.4 Insured Parties
24.5 Beneficiaries
24.6 Insurers
24.7 Notices
24.8 Certifications
24.9 Duration of the Policies
24.10 Payment Currency
24.11 Insurances of Contractors and Suppliers
24.12 Additional Terms and Conditions
24.13 Claims
24.14 No Release from Contract Obligations
24.15 General Provision
CLAUSE 25. TAXES
CLAUSE 26. RESCISSION OF THE CONTRACT
26.1 Events of Default by the Contractor
26.2 Events of Default by the Commission
26.3 Notice of Potential Events of Default
vii
26.4 Right of Rescission
26.5 Termination in Case of Delay in the
Scheduled Date of Completion of the Project
26.6 Non-Interruption of Construction During the Sanitation Periods.
CLAUSE 27. ACT OF GOD OR FORCE MAJEURE AND SUSPENSIONS
27.1 Release of Liability
27.2 Burden of Proof
27.3 Specific Act of God or Force Majeure
27.4 Right of Termination by Act of God or Force Majeure
CLAUSE 28. LIABILITY LIMIT
CLAUSE 29. CONFIDENTIALITY
29.1 Information from the Commission
29.2 Disclosure of Information
CLAUSE 30. ASSIGNMENT OF THE CONTRACT; SUBCONTRACTS
30.1 Assignment
30.2 Subcontracting
30.3 Labor Obligations
30.4 No Release of Liability
CLAUSE 31. APPLICABLE LAW AND SOLUTION OF DISPUTES
31.1 Applicable Law
31.2 Independent Expert
31.3 Arbitration
31.4 Waiver of Immunity
31.5 Continuation of the Works during Legal Procedures
CLAUSE 32. GENERAL PROVISIONS
32.1 No Waiver; Accumulation of Remedies
32.2 Entire of the Contract
32.3 Notices
32.4 Severability of the Provisions
32.5 Amendments and Waivers
viii
32.6 Language
ix
LIST OF ANNEXES
ANNEX 1 TECHNICAL SUPPORT AND GENERAL (PRELIMINARY) TRAINING SCHEDULE
ANNEX 2 SPECIFICATIONS OF THE PROJECT AND STANDARDS
ANNEX 3 DATES OF CRITICAL EVENTS
ANNEX 4 CANCELLED
ANNEX 5 TECHNICAL INFORMATION REQUIRED AFTER SIGNATURE OF THE CONTRACT
ANNEX 6 ENVIRONMENTAL MANAGEMENT MANUAL
ANNEX 6A QUALITY ASSURANCE MANUAL
ANNEX 7 FORM FOR SUTERM COLLECTIVE CONTRACT
ANNEX 8 INDEPENDENT EXPERTS
ANNEX 9 PERMITS
ANNEX 10 EXECUTION SCHEDULE
ANNEX 11 TECHNICAL PROPOSAL
ANNEX 12 ECONOMIC PROPOSAL
ANNEX 13 WARRANTIES, TESTS AND CONTRACTUAL PENALTIES
ANNEX 14 TERMINATION VALUE
ANNEX 15 DOCUMENTATION FOR FINANCING
ANNEX 16 FORM OF PERFORMANCE WARRANTY
ANNEX 17 FORM FOR QUALITY WARRANTY
ANNEX 18 GUIDELINES OF THE COORDINATION PROCEDURE
x
ANNEX 19 CATALOGUE OF VALUES AND INTEGRATION OF THE UNITS
ANNEX 20 ANNEX OF TECHNICAL AGREEMENTS
ANNEX 21 CONSORTIUM AGREEMENT
ANNEX 22 PAYMENT BUDGET
ANNEX 23 SUPERVISION MECHANISM
ANNEX 24 PROCEDURE FOR CALCULATION OF DOMESTIC INTEGRATION
DEGREE OF THE SUPPLIES.
63 CH EL CAJON HYDROELECTRIC PROJECT
MIXED FINANCED PUBLIC WORKS CONTRACT
This Mixed Financed Public Works Contract is entered between Comision
Federal de Electricidad (Federal Electricity Commission, hereinafter
"Commission"), represented by its Director of Financed Investment Projects,
Eugenio Laris Alanis, and Constructora Internacional de Infraestructura, S.A. de
C.V. (hereinafter "Contractor"), represented by its legal representative, Jorge
Bernardo Aguirre Quintana, pursuant to the following Representations and
Clauses:
REPRESENTATIONS
I.- Commission declares that:
A. It is a public decentralized entity of Public Federal Administration
with proper legal capacity and equity, governed by the Law on Electric Power
Public Service and other laws of public order, and has the legal capacity to
enter into and fulfill this Contract;
B. Its main purpose consists of providing public electric power
service, which includes planning the National Electricity System, generating,
conducting, transforming, distributing and selling electric power and developing
all
2
works required to plan, operate and provide maintenance to the National
Electricity System;
C. To satisfy demand for electric power it requires design, manufacture
and construction of Civil, Electromechanical and Associated Works; assembly,
tests and putting into operation of two turbo generator units with the technical
characteristics indicated in Section 8, and guaranteed power levels at different
hydraulic drops indicated in Section 2 of the Bidding Bases. Works that
altogether are called the 63 CH El Cajon Hydroelectric project, for which the
main structures are located in the Municipalities of Yesca and Santa Maria del
Oro, State of Nayarit, United States of Mexico;
D. For such purposes and according to the Law on Public Works and
Services Related these of the United States of Mexico, it published Call to
International Public Bidding Event Number 18164093-011-02 in the Official
Gazette of the Federation on September 3rd, 2002__, and according to Articles
27-I, 28, 30-II, 32, 33 and 45 of such Law and the procedure established in
aforementioned Call, it has awarded this Contract to develop all necessary works
listed in Section 8 to build aforementioned Power Station;
E. It has obtained the necessary authorizations to comply with its
obligations under this Contract, including
3
approval by the H. Chamber of Deputies in the Federal Expense Budget for 2002,
as well as authorization by the Energy Secretariat to assume the commitments
contemplated in this Contract, contained in official communication number
310.-0450 of March 27, 2002, and authorization by the Finance and Expense
Intersecretarial Commission, issued November 9, 2001 under Resolution 01-XXIV-2;
F. As Director of Financed Investment Projects, Eugenio Laris Alanis
enjoys sufficient faculties to bind Commission to the terms of this Contract
according to public document number 17,837 dated April 22nd 1999, granted before
Maria Guadalupe Ponce Torres Notary Public number 41 of Tlalnepantla, Estado de
Mexico, faculties that to date have not been modified, restricted or revoked;
and
G. Its place of business is located at Avenida Paseo de la Reforma 164,
Mezzanine 2, Colonia Juarez, 06600 Mexico, D.F., which will be its legal
domicile for effects and purposes of this Contract.
II. Contractor declares that:
A. It is a corporation duly organized and legally existing under the
laws of Mexico, according to public document number 158,595granted before Jesus
Castro Figueroa, Notary Public number 38of the Distrito Federal, duly entered
4
in the Public Registry of Commerce of the Distrito Federal under business folio
number 299,934, dated February 26th 2003, and enjoys the legal capacity to sign
and fulfill this Contract;
B. It knows the content and scope of all applicable laws, including
without limitation the Law on Public Works and Services Related to These, the
Law on Income Tax and the General Law on Ecological Balance and Protection of
the Environment, as well as the corresponding applicable norms and regulations,
among these, the Regulations of the Law on Public Works and Services Related to
These, and Contractor itself or the Persons who have presented the Bid which was
awarded this Contract have fulfilled all requirements established in
International Public Bid Call Number 18164093-011-02 published by Contractor in
the Official Gazette of the Federation on September 3rd, 2002 as well as the
Bidding Bases issued according to such Call;
C. It has carried out all corporate acts, obtained all necessary
corporate authorizations and of any other kind, and complied with all applicable
legal requirements necessary to execute and fulfill this Contract, and neither
Contractor nor third parties associated to it, including its partners or
members, are included in the assumptions of Article 51 of the
5
Law on Public Works and Services Related to These, and that it is currently up
to date in respect to tax liabilities as provided for in Article 32-D of the Tax
Code of the Federation and Rule 2.1.12 of Year 2002 Miscellaneous Tax Resolution
published May 30, 2002 in the Official Gazette of the Federation;
D. It has the experience, organization, elements and technical and
financial capacity established in these Bidding Bases to fulfill the obligations
which it hereby assumes;
E. Its legal representative, Jorge Bernardo Aguirre Quintana, enjoys
sufficient faculties to sign this Contract on its behalf and representation,
according to Public Deed number 158,595 dated Februrary 6, 2003 being dully
registered in the Public Registry of Commerce of the Distrito Federal, folio
number 299,934 on Februarry 26, 2003, faculties that to date have not been
modified, restricted or revoked;
F. It has established its place of business at Mineria St. #145,
Building G, Second Floor, Colonia Escandon, 11800, Mexico D.F., which will be
its legal domicile for effects and purposes of this Contract; and
G. It knows and agrees to the Executory Project of the Works to be
developed, and therefore assumes the
6
responsibility to cover costs concerning amounts of additional work required to
complete the Works according to such project; and
Based on the above Representations, the parties agree to the following:
CLAUSES
CLAUSE 1.
DEFINITIONS AND REFERENCES
1.1 DEFINITIONS. For purposes of this Contract the terms listed in this
Clause 1.1, when beginning with a capital letter will have the meaning
established for each below:
"FINAL ACCEPTANCE" means in respect to any Unit, total performance of
the requirements of Clause 19.6 after Provisional Acceptance has occurred.
"PROVISIONAL ACCEPTANCE" means, provisional acceptance by Commission of
any Unit according to Clause 19.1, in the understanding that upon Provisional
Acceptance of the first Unit Contractor must have totally complied with Works
related to such Unit, completed surplus work, including operating tests of
gantry cranes and the emergency power plant; completed work in intakes and
pressure pipes, including operating tests of servomotors and gantry cranes; in
generation works, civil works that correspond to the engine
7
room, the oscillating gallery and venting tunnel, in addition to placing and
sealing sluice gates of the second Unit.
"CREDITORS" means the persons who have granted Contractor financing
exclusively for the Works according to the Financial Agreements.
"LUMP-SUM PRICE ACTIVITIES" means the activities described in annexes
OE-3, OE-4 and OE-5.
"UNIT PRICE ACTIVITIES" means the activities described in Annex OE-5A.
"FINANCIAL AGREEMENTS" means all credit agreements, promissory notes,
guaranty agreements, mortgages and other documents in connection with financing
for the Works, including any modification, extension, renewal, refinancing and
replacement of these, but excluding those related to financing granted by any of
the Participants or by any of their Affiliates.
"TECHNICAL SUPPORT" means consulting and training services as well as
related documents, which Contractor will provide to Commission's personnel in
connection with putting into service and operation of the Station, described in
Annex 1 hereof.
"HYDROELECTRIC DEVELOPMENT" means the compound of Works, facilities,
systems and electromechanical equipment intended
8
for the common purpose of producing electric power, taking advantage of the
potential power of a reservoir.
"GOVERNMENT AUTHORITY" means any government, either federal, state or
municipal, or any secretariat, department, court, commission, council,
government entity, agency or similar authority of any of such governments.
"MEXICAN GOVERNMENT AUTHORITY" means any Government Authority in
Mexico.
"BIDDING BASES" means the bidding bases issued according to the Call,
including any addenda, modifications and explanations issued in writing by
Commission according to such bases.
"RECORD BOOK" means the document establishing official communication
between Commission's Supervision Residence and Contractor, where both parties
register all relevant events in connection with the Works, progress of the works
since begun until completed, as well as yields observed, both of hand labor as
of equipment used in the Works.
"MEXICAN BOND" means unsettled bonds issued by Mexico with maturity in
2009, known as "UMS 09" bonds.
"NET CAPACITY" means total generating capacity of the Station obtained
in high tension stations from the main transformer.
9
"NET WARRANTED CAPACITY" means net electric power generating capacity
warranted for the Station in the Bid.
"ACT OF GOD OR FORCE MAJEURE" means any act or event that makes it
impossible for the affected party to fulfill its obligations under this
Contract, if such act or event is unpredictable, beyond reasonable control and
does not result from any fault or negligence by the affected party and it has
not been possible for that party to overcome such act or event by assuming
diligent action. Subject to satisfying the conditions established in the above
phrase, an Act of God or Force Majeure will include but not be limited to the
following acts or events, or any similar acts or events that prevent the
affected party from fulfilling its obligations under this Contract: (a)
phenomena of nature, such as storms, floods and earthquakes; (b) wars, civil
disturbances, riots, insurrections, sabotage and commercial attachments; (c)
transportation disasters, either by sea, railway, air or land; (d) strikes or
other labor disputes in Mexico not derived from the affected party's default of
any labor contract; (e) acts or omissions by a Government Authority not
voluntarily induced or encouraged by the affected party, nor resulting from any
default of its obligations; (f) fire; (g) impossibility for the affected party
despite its best
10
efforts, to duly obtain any Permit from any Government Authority, for such party
to fulfill its obligations under this Contract; and (h) variations in financial
costs according to Clause 27.5 of this Contract. It is expressly understood that
an Act of God or Force Majeure will not include any of the following events: (i)
economic difficulty (including without limitation, voluntary bankruptcy or
suspension of payments proceedings) other than the event referred to in
paragraph (h) of this definition; (ii) change in the market conditions other
than the event referred to in paragraph (h) of this definition; or (iii) delay
in delivery of materials, as long as such delay was not caused by an Act of God
or Force Majeure within the scope of this definition.
"ACTIVITIES CATALOGUE" means the list of activities and sub-activities
analyzed according to work concepts that intervene in executing
Electromechanical Works (Annex OE 4), Civil Works and Associated Works (Annex OE
5) of the part of the Lump-Sum Price Contract, which contains the description of
activities and sub-activities and the amounts of these.
"CONCEPTS CATALOGUE" means the list, according to order, of work
concepts in groups of activities and sub-activities that intervene in executing
the Civil Works (Annex OE 5) of the part of the Unit Price Contract which
contains the item
11
description, measuring units, work amounts, unit prices in numbers and letters,
and amounts per item.
"VALUES CATALOGUE" means the catalogue of values assigned to the
various parts of the Works provided by Contractor in annexes OE-4, OE-5, OE-5A,
OE-6, OE-7, OE-8, OE-9 and OE-9A, as part of the Economic Bid according to the
Bidding Bases and attached hereto as Annex 19.
"CENACE" means the National Power Control Center.
"STATION" means the compound of facilities and equipment that
constitute the power generating station, as described in greater detail in
Section 8.
"FINAL ACCEPTANCE CERTIFICATE" means, in respect to any Unit, the
certificate issued by Commission, establishing final acceptance of the
corresponding Unit according to Clause 19.6.
"PROVISIONAL ACCEPTANCE CERTIFICATE" means in respect to any Unit, the
certificate issued by Commission, establishing provisional acceptance of the
corresponding Unit according to Clause 19.1.
"FINAL CLOSING" means the Critical Event when the diversion tunnels are
closed in order to begin filling the reservoir, after concluding the second
pouring stage of slabs of the concrete face of the curtain to a 375.00
elevation,
12
injected the waterproof screen from the plinth and galleries to form the
watertightness bed of the dam, and completed assembly and tests of intake works
gates and surplus works.
"FINANCIAL CLOSING" means the date when Contractor fulfills the
precedent conditions of the Financial Agreements to be able to dispose of debt
financing that, together with capital resources, will be applied to execute the
Project and comply with other obligations assumed by Contractor in virtue of the
Contract, in the understanding that obligations for Contractor derived from this
Contract will not be conditioned to its being able to obtain such Financial
Closing.
"SITE CONDITIONS" refers to the natural, environmental and social
conditions of the Site and surroundings, including without limitation,
availability of transport means, availability of local workers, and obligations
derived from hiring them, climatic and hydrologic conditions, characteristics of
the land, conditions of the subsoil and Applicable Laws.
"CONTRACT" means this Mixed Public Financed Work Contract, including
all Annexes attached to it (that constitute an integral part of this Contract),
and all amendments made in it according to the terms hereof.
"CALL" means International Public Bid Call Number
13
18164093-011-02 published September 3, 2002 by Commission in the Official
Gazette of the Federation, including modifications in it that have been further
published.
"TOTAL PROJECT COST" means the total cost of civil and
electromechanical engineering, manufacture, supply, construction, assembly,
putting into service, financing during construction period of Hydroelectric
Development and Tests of the Station, including cost of Warranty for the Station
and Spare Parts, will have the same meaning as "Contract Price".
"FAULT" means any fact, condition or event that affects a Work or part
of it, and that totally or partially leaves or may leave such Work useless for
its purpose or function.
"REAL ESTATE RIGHTS" means the real rights of possession or use that
Contractor could require in order to execute the Works, including rights related
to: (i) the Site, (ii) all areas necessary for waste banks, materials banks and
storage yards; (iii) access roads; and (iv) any other additional area necessary
to build the Hydroelectric Development.
"MALFUNCTION" means an event that totally or partially limits the
generating capacity, efficiency or operational safety of the Hydroelectric
Development and/or of the Station in respect to the Specifications of the
Contract, and if not
14
remedied may affect optimum condition of Hydroelectric Development and/or of the
Station.
"DAY" means a calendar day.
"BANKING DAY" means any Day when banking institutions in the City of
Mexico, D.F. and in the City of New York, State of New York, United States of
America, provide service to the public based on a requirement or legal
authorization, excluding Saturday and Sunday.
"WORKING DAY" means any Day except for those considered of obligatory
rest under the Mexican Federal Labor Law or due to labor contracts between
Commission and the SUTERM.
"WARRANTED AVAILABILITY" means warranted operating availability of the
Station specified in the Bid, as established in Annex 13.
"BIDDING DOCUMENTS" means the Call, Bidding Bases and the Bid.
"DOLLARS" or "$US" means the currency of the United States of America.
"MAIN EQUIPMENT" means main equipment and permanently installed systems
that integrate each of the Units, including turbo generator units, the
substation of the Station, the control system, main transformers and traveling
cranes.
"CONTRACTOR'S EQUIPMENT" means all specifications,
15
parameters and technical requirements concerning engineering, construction and
performance of the Works contained or referred to in this Contract or in the
Bidding Documents, in the understanding that in case of discrepancies between
the Technical Bid and other Specifications of the Contract, the latter will
prevail over the Technical Bid and, without prejudice of the above, in case of
discrepancies between standards contained in the Bid or other Specifications of
the Contract, the highest standard will prevail.
"SPECIFICATIONS AND STANDARDS" means civil and electromechanical
specifications and standards on execution of the Works included in Annex 2 of
this Contract.
"INDUSTRY STANDARDS" means recent technology, methods and standards
commercially approved and available for Contractor at the time when executing
the subject matter Works; in the understanding that, in case such technology,
methods and standards were available after the date when the bids are presented
according to the Bidding Bases and force Contractor to incur in significant
expenses in addition to those required in order to use the technology, methods
and standards previously available, then "Industry Standards" will refer to
technology, methods and standards commercially tested, available on the date
when the bids are presented.
16
"CRITICAL EVENT" means any of the events described as such in Annex 3.
"CRITICAL EVENT SUBJECT TO PENALTY" means any of the Critical Events
described as such in the table of Section 2.1.21, for which the date established
by Commission cannot be changed in respect to the Bids presented.
"EVENT OF DEFAULT BY COMMISSION" will have the meaning assigned in
Clause 26.2.
"EVENT OF DEFAULT BY CONTRACTOR" will have the meaning assigned in
Clause 26.1.
"DECISION" means decision dated March 14, 2003, issued by Commission
whereby this Contract was awarded.
"PROVISIONAL ACCEPTANCE DATE", in respect to any Unit means the date
when Contractor obtained Provisional Acceptance of such Unit.
"PROVISIONAL ACCEPTANCE DATE OF THE STATION" will have the same meaning
as the definition of the Project Completion Date.
"PROJECT COMPLETION DATE" means the date when Contractor has obtained
Provisional Acceptance of all the Units; has concluded the Performance Tests in
the turbine and generator which will be performed in only one of both Units,
according to the technical specifications contained in the Volumes of
17
Section 8; has checked warranted values; has finished dismantling the
construction facilities and developed all work requested in the Environmental
Impact Declaration.
"CRITICAL EVENT DATE" means any of the dates referred to in Annex 3,
when Contractor must have completed the Works described in such Annex for such
date; Critical Event Dates may be extended only according to Clauses 13.3 and
27.3.
"STARTING DATE" means the starting date of the Works established in
Clause 13.1.
"CONTRACT PAYMENT DATE" means the dates when the Price of the Contract
will be paid, broken down as follows:
1st Payment.- 60% of the Price of the Contract of the part at lump-sum
price, plus the amount really executed of the part that corresponds to unit
prices on the Scheduled Provisional Acceptance Date of the first Unit, as long
as Contractor has obtained Provisional Acceptance of the Unit in question on or
before the Scheduled Provisional Acceptance Date of the first Unit.
Exclusively for purposes of the 1st Payment, two months in advance
Contractor must notify Commission in writing whether the Provisional Acceptance
will be on or before the Scheduled Provisional Acceptance Date of the first
Unit, for Commission begin the necessary negotiations and be able to
18
make the corresponding payment.
If Contractor does not obtain Provisional Acceptance of the first Unit
on or before the Scheduled Provisional Acceptance Date of such Unit, but obtains
it within the first 30 days after such date, within the first 30 days after the
Provisional Acceptance Date of the first Unit Commission will make the payment,
having been previously notified such Acceptance in writing 30 days before the
Provisional Acceptance Date of the first Unit.
If Contractor again fails to obtain Provisional Acceptance within
aforementioned 30-day period, within the first three Months after it obtains
Provisional Acceptance of the Unit, Commission will make the payment, having
been previously notified in writing of such Acceptance two months in advance.
And in case Contractor obtains Provisional Acceptance in advance before such
two-month period, Commission will make the payment within the first three months
after such Provisional Acceptance Date.
2nd Payment. 40% of the Contract Price of the part that corresponds to
the lump-sum price and the part of unit prices which has been executed and not
settled per the Project Completion Date.
"SCHEDULED PROVISIONAL ACCEPTANCE DATE" in connection
19
with any Unit, means the Critical Event Date according to which Contractor must
have obtained Provisional Acceptance of such Unit.
"SCHEDULED FINAL CLOSING DATE" means the Critical Event Date according
to which Contractor must have achieved the Final Closing.
"SCHEDULED PROJECT COMPLETION DATE" means the Critical Event Date
established as such in Annex 3 of the Contract.
"AFFILIATE", in respect to any Person, means any other Person who
controls, is under control, or who together with such Person is under common
control of a third party, in the understanding that (a) control is understood as
the capacity to direct or cause direction of administration of the policies of
such other Person, either by holding shares or other securities with voting
rights or in any other manner and (b) in the case of Commission, Affiliate will
not include Mexico.
"MAJOR GOVERNMENT FORCE" means any of the acts or events identified in
the definitions "Act of God" or "Force Majeure" in sections (b) (only when the
events described in this item occur in Mexico, it means commercial attachment
filed by Mexico), (e) (only in case of acts by a Mexican Government Authority),
and (g) (only in case a Permit is obtained from a
20
Mexican Government Authority).
"QUALITY WARRANTY" will have the meaning assigned in Clause 12.1(b).
"FULFILLMENT WARRANTY" will have the meaning assigned in Clause
12.1(a).
"EXECUTION WARRANTIES" means the warranties granted by Contractor for
Works related to the Station and each of the Units, once Provisional Acceptance
has been obtained, and with the meaning assigned in Clause 21.2.
"STATION WARRANTY" means Contractor's obligation during the Warranty
Period to repair or replace Works or Materials of the Station that are faulty or
cause Malfunctions, as established in Clause 21.1.
"OPERATION WARRANTY" means warranties included in the Bid in respect to
warranted operating values of the Units.
"FEDERAL GOVERNMENT" means the Federal Government of Mexico.
"LIEN" means any pledge, mortgage, guaranty trust or any other lien or
encumbrance over an asset or right.
"SPECIAL TOOLS" means the necessary tools to provide maintenance and
repair the Hydroelectric Development works and the Station, including assembly
and disassembly, transporting and hoisting spare parts and equipment.
21
According to the design of each set of equipment Contractor must deliver the
type and amount of special tools to be used and the corresponding manual as
established in the Bid.
"TAXES" means all and each of the taxes (including but not limited to
federal income taxes, tax on gross income, sales, use, properties, added value
tax and assets tax), charges (including but not limited to charges or fees on
documents, licenses or registrations) taxes, import duties or withholdings of
any kind, together with all and each of the penalties, fines, surcharges,
increased taxes and interest applicable to these, charged, collected or
established by any Government Authority.
"ENGINEERING" means the entire engineering necessary to develop and
start the Hydroelectric Development and the Station, which Contractor must carry
out according to Specifications of the contract, including civil, mechanic and
electric aspects, as well as all the technical documents, specifications,
designs, schedules, manuals and other information necessary for design,
manufacture, supply, construction, assembly, tests and putting into service of
the Units.
"AUXILIARY FACILITIES" means auxiliary facilities of Hydroelectric
Development and of the Station within the scope
22
of the Project, as specified in Annex 2.
"INTERCONNECTION" means connection, tests and putting into service of
equipment of the substation with the transmission lines to be provided by
Commission. Within the scope of the Contract, Contractor will provide all
connecting elements of primary equipment for nose-pieces and the transmission
line itself, for layout of the substation presented by Commission, in
engineering included in the Bidding Bases.
"PROJECT HEAD" is one of Commission's representatives and will have the
meaning assigned in Clause 7.1.
"KW" means 1,000 (one thousand) watts.
"LAWS" means all laws, treaties, codes, regulations, norms, decrees,
circular letters, rules, decisions, orders, sentences, provisions,
interpretations and authorizations issued by any Government Authority with
jurisdiction over the matter in question, and that are in force at the certain
time.
"APPLICABLE LAWS" means all laws, treaties, codes, regulations, norms,
decrees, circular letters, rules, decisions, orders, sentences, provisions,
interpretations and authorizations issued by any Mexican Government Authority
with jurisdiction over the matter in question, and that are
23
in effect at the certain time.
"PRELIMINARY PROJECT BOOK" means the record to be kept by Contractor
according to Annex 5 and delivered to Commission according to Clause 14.1.
"FINAL BOOK OF DOCUMENTS" means the record, including without
limitation, all documents generated, produced or issued by Contractor in
engineering, procurement, construction, installation and tests of the Station,
as well as the corresponding operating and maintenance manuals Contractor must
deliver to Commission before Provisional Acceptance of the Station according to
Clause 19.1 and Annex 5.
"WINNING BIDDER" means Constructora Internacional de Infraestructura,
S.A. de C.V.
"ENVIRONMENTAL MANAGEMENT MANUAL" means the environmental management
system that covers all stages of the Project presented by Contractor as part of
the Technical Bid and is attached hereto as Annex 6.
"QUALITY ASSURANCE MANUAL" means the manual to assure quality of
Materials and Works, prepared and presented by Contractor as part of the
Technical Bid and attached hereto as Annex 6A. Preparation of this manual must
be based on NMX-CC-018:199 INMC Guidelines for Preparing Quality Manuals.
24
"STATION MANUAL" means the manual for operation and maintenance of the
Station which Contractor will deliver according to Clause 19.6 and Annex 5
hereof.
"MAINTENANCE MANUAL" means the technical document that describes the
asset, how it operates, contains instructions, the preventive action program,
suggestions for corrective action, lists of spare parts, correction of faults,
danger warnings and the assets catalogue, among others.
"CURRENT MARGIN" means the difference, expressed in basic points,
between (a) yield-to-maturity of the Mexican Bond published in page BTMMMX (go)
of the Bloomberg information system and (b) yield-to-maturity of the series of
United States Treasury Bonds published in page PX1 (go) of the Bloomberg
information system with maturity date closer to the Mexican Bond, at the close
of any Banking Business Day.
"ORIGINAL MARGIN" means the difference, expressed in basic points,
between (a) yield-to-maturity of the Mexican Bond published in page BTMMMX (go)
of the Bloomberg information system and (b) yield-to-maturity of the series of
United States Treasury Bonds published in page PX1 (go) of the Bloomberg
information system, with maturity date closer to the Mexican Bond, at the close
of the Banking Day immediately before the date when the Bid is submitted.
25
"MATERIALS" means all or any part of the equipment, systems, materials
and any other tangible and permanently installed items, including all software
components, accessories and documents thereof necessary or appropriate according
to this Contract for incorporation in the Station.
"MONTH" means one calendar month.
"MEXICO" means the United States of Mexico.
"MW" means 1,000,000 (one million) watts.
"WORKS" means the Hydroelectric Development, including equipment,
materials, works and services of any kind to be provided or executed by
Contractor, either in respect to the Lump-Sum Price Activities or the Unit Price
Activities, whether specifically established in this Contract or within its
scope, including without limitation, Engineering, purchases of Materials and
Main Equipment, Associated Works, Civil Works, Electromechanical Works,
Auxiliary Facilities, Tests, Interconnecting Works, Technical Support and all
other works or services necessary or related to completion of the Project.
"ASSOCIATED WORKS" means construction of hard waste warehouses
(deposits), flying ash warehouse, mechanic and electric shop, dinning room for
operations personnel, pier, high and low rotation warehouse, IMSS (Mexican
Social
26
Security) Clinic, bridge over Santiago River, platform required in order to
build warehouses, the second part of the access road; civil works and the
integral Industrial and Physical Safety System, definite inside roads and
signaling in them; includes maintenance and preservation of all these works; in
addition, reforestation, rescue of species programs and other activities
established in the Environmental Impact Resolution, in the area of the main
structures and the infrastructure of Contractor, Subcontractors and Suppliers,
issued by the General Bureau of Environmental Impact and Risks; and those
considered as such in the Values Catalogue and in Section 8.
"CIVIL WORKS" means the main works of the Project, which without
limitation, include diversion works, containment works, generation works,
surplus works, substation elevator works, provisional works for construction of
main works, infrastructure works, diverse activities according to the values
catalogue and any other work that requires civil engineering in connection with
the project.
"ELECTROMECHANICAL WORKS" means the entire works in connection with
design, manufacture, construction, supply, assembly, tests and putting into
service of all equipment and systems of the Hydroelectric Development, all of
which must
27
be developed according to Specifications of the Contract, as well as equipping
of bays for output of transmission lines and installation of a control system
for the Units.
"SPARE PARTS" means the spare parts and Special Tools indicated in each
of the Technical Electromechanical specifications contained in volumes II and
III of Section 8 of the Bidding Bases which Contractor must provide according to
Clause 22.5.
"PARTICIPANTS" means (a) the bidder who presented the Bid, (b) in case
the Bid was presented by a consortium or a corporation with a specific purpose,
every member of such consortium or every partner of such corporation, and (c)
any Affiliate of any Person referred to in sections (a) or (b) above that has
been used to satisfy financial capacity or experience requirements established
in the Bidding Bases.
"WARRANTY PERIOD" means in connection with any Unit, the period
starting on the Provisional Acceptance Date that corresponds to that Unit and
ends on whichever occurs after between: (a) the second anniversary of the
Provisional Acceptance Date of the Unit involved; and (b) the date determined
according to Clause 21.4.
"INDEPENDENT EXPERT" means any of the engineering or consulting
companies listed in Annex 8, which may be updated
28
during the term of the Contract.
"PERMITS" means all permits, licenses, authorizations, consents,
exemptions, registrations, approvals or any other authorizations that must be
obtained from or granted by any Government Authority in order to sign and
execute this Agreement, including but not limited to Permits specified in Annex
9.
"PERSON" means any individual or corporation, including any kind of
corporation, association, trust, Government Authority or other form of entity or
association.
"PESO" or P$ means the currency of Mexico.
"EXECUTION TERM" means the term established in Clause 13.1 to execute
the Works.
"CONTRACT PRICE" means the price established in Clause 9.1, to be paid
for Works actually executed, either regarding Lump-Sum Price Activities or Unit
Price Activities, and that therefore, may be reduced as provided for in Clause
9.
"PROCEDURE" means the document that among other information contains
the purpose and scope in executing an activity, methodology, or itemized
instructions to develop it, indicates the equipment to be used, reference
technical information, as well as acceptance criteria for the activity
developed, and also includes forms to record parameters
29
derived from execution, the names of those who executed it, the person in charge
of revising it and the person responsible for approving the results.
"COMPLEMENTARY SCHEDULE" means the itemized schedule of activities per
structure and substructure, divided into fronts and sub-fronts of work, with the
purpose of keeping follow-up on progress of the Project.
"EXECUTION SCHEDULE" means the schedule for the Works to be executed,
attached hereto as Annex 10, prepared and delivered by Contractor as part of the
Technical Bid, incorporating each of the Critical Event Dates, in the
understanding that (i) if such schedule is adjusted as established in the
Contract or in the Regulations of the Law on Public Works and Services Related
to These, the term of the Execution Schedule will refer to the execution
schedule such as it was adjusted according to the terms of that provision, and
the adjusted execution schedule will substitute the execution schedule attached
hereto as Annex 10, and (ii) none of the provisions of the Execution Schedule
may be construed as a change of the Critical Event Dates or that Commission is
imposed an obligation.
"BID" means the bid declared winner in the Decision, including the
Technical Bid and the Economic Bid.
30
"ECONOMIC BID" means the economic bid presented by Contractor according
to the Bidding Bases, attached hereto as Annex 12.
"TECHNICAL BID" means the technical bid presented by Contractor
according to the Bidding Bases, which is included with this Contract and
summarized in respect to the scope of the Works in Annex 11.
"PROTOCOL" means the document that describes a series of activities in
a logical sequence in order to develop a specific event in a system or the
complete unit. This document contains information, such as the purpose, previous
requirements, applicable documents, description of the sequence itself,
acceptance criteria, names of persons responsible for executing and approving
the activity.
"SUPPLIER" means anyone who supplies Materials or Main Equipment to
Contractor.
"PROJECT" means the entire Civil and Electromechanical Works that form
the Hydroelectric Development, including the Station, and considering design,
engineering, manufacture, supply, assembly, construction, tests, technical
support and putting into service according to the terms and conditions of the
Contract.
31
"EXECUTIVE PROJECT" means the itemized design that includes all
documents and information necessary for the Contractor to execute the work; and
therefore, includes drawings, calculus records, as well as building
specifications.
"TESTS" means the tests required in the Technical Specifications of
Section 8 of the Bidding Bases, to be performed by Contractor according to
Clause 18.
"PERFORMANCE TESTS" means the tests described as such in Annex 13, to
be performed by Contractor according to Clause 18.3.
"OPERATING TESTS" means the tests described as such in Annex 13, to be
performed by Contractor according to Clause 18.2.
"PUTTING INTO SERVICE TESTS" means the tests described as such in Annex
13, to be performed by Contractor according to Clause 18.1.
"PROGRESS REPORTS" means the monthly reports issued in writing and
electronic means, itemizing progress of the Works and compliance with the
Quality Assurance Manual and the Environmental Management Manual, to be
delivered by Contractor to Commission according to Clause 13.4.
"SUPERVISION RESIDENT" is one of Commission's
32
representatives and will have the meaning assigned in Clause 7.1.
"SPECIFIC WORK SUPERVISION RESIDENT" will have the meaning assigned in
Clause 7.1.
"RESOLUTION ON ENVIRONMENTAL IMPACT MATTERS" means the document whereby
the Environment and Natural Resources Secretariat, through the General Bureau of
Impact and Risks against the Environment, grants conditioned authorization in
Environmental Impact matters for development of the Project.
"INDUSTRIAL SAFETY", together with the organization systems, means the
human, economic and material elements, and the legal provisions that permit
establishing preventive means to eliminate, reduce or control risks that may
affect persons, the facilities and processes, and provide responses aimed at
reducing the possible effects. The above also includes civil protection,
occupational health and physical safety of assets and processes.
"WEEK" means any period consisting of seven (7) consecutive days.
"ENVIRONMENTAL MANAGEMENT SYSTEM OR SSA" will have the meaning
established in Section 8 of the Bidding Bases.
"QUALITY ASSURANCE SYSTEM OR QAS" will have the meaning established in
Section 8 of the Bidding Bases.
33
"NATIONAL ELECTRICITY SYSTEM" means the system of facilities property
of Commission used to generate, transform and distribute electric power, to
which the Units will be interconnected.
"SITE" means all areas of the Hydroelectric Development designated by
Commission to execute the Works, as identified in Section 8, and immediate
surroundings of the Station and connected transportation routes.
"SNC" means national credit corporation.
"SUBCONTRACTOR" means any Person hired by Contractor to perform any
part of the Works according to Clause 30.2, without including Suppliers.
"SUPPLY" means the process that includes design, materials,
manufacture, factory tests, spare parts, special tools and transportation of
equipment and materials to the Site.
"MINOR SUBSTITUTION" is one that must not imply deterioration in
quality and characteristics required in the Technical Specifications; technical
and descriptive documents justifying the substitution must be presented.
"SUTERM" means the Sole Electricity Workers Union of Mexico.
"FINANCIAL EXPENSE RATE" means (a) in respect to amounts
34
in Pesos, a rate and accessories determined according to the procedure
established in the Tax Code of the Federation, as if it were an extension to pay
for tax credits according to article 55 of the Law on Public Works and Services
Related to These, and (b) in respect to amounts in Dollars, the average pondered
rate of the cost of the debt and capital, indicated in form OE-1 "Financing
Structure" of its Bid (but excluding any interest applied as penalty or due to
default), in the understanding that by no means may this rate be higher than the
one established in section (a) of this definition.
"UNIT" means any of both turbo generator units 1 and 2 equipped to
generate electric power, each with a 375 MW nominal power capacity, for the drop
and wear in design specified, including all equipment, systems, Civil Works and
Associated Works that correspond to the Unit involved required for its normal
and continuous operation, which are described in the Technical Specifications
Section of the Bidding Bases.
"FIRST UNIT" means the Unit which has the first Provisional Acceptance
Date of all Provisional Acceptance Dates, according to the Execution Schedule.
"LAST UNIT" means the Unit which has the last Provisional Acceptance
Date of all the Provisional Acceptance
35
Dates, according to the Execution Schedule.
"TERMINATION VALUE" means the amount Commission must pay to Contractor
in case this Contract is terminated according to Clauses 10.1, 26.4, 26.5 or
27.4 and others related to the Contract, calculated according to the provisions
of Annex 14.
1.2 SINGULAR AND PLURAL. The terms defined in Clause 1.1 may be
used in this Contract both in singular and plural.
1.3 HEADINGS AND REFERENCES. All headings in this Contract are
exclusively used to facilitate its reading but will not limit its
interpretation. Unless otherwise provided for, all references made in this
Contract to Clauses or Annexes, mean the Clauses and Annexes of this Contract.
CLAUSE 2.
PURPOSE OF THE CONTRACT
The purpose of this Contract is to execute the Civil Works,
Electromechanical Works and Associated Works, procurement, engineering,
manufacture, transportation, assembly, tests and putting into service of the two
equipped turbo generator Units, each with a nominal power of 375 MW, for the
drop and wear in design specified and itemized in Section 8 of the Bases for
Bidding, Works altogether named El Cajon Hydroelectric Project, with the main
structures located in the La Yesca and Santa Maria del Oro Municipalities, State
36
of Nayarit of the United Mexican States, to be developed by Contractor according
to the Execution Schedule, in order to obtain Provisional Acceptance of each
Unit on or before the Scheduled Provisional Acceptance Date.
Works consisting of Activities at Lump-Sum Price are described in
detail in annexes OE-3, OE-4 and OE-5 of Section 4 of the Bidding Bases and will
be developed under the lump-sum price method; while the part of the works that
corresponds to Activities at Unit Prices are described in detail in Annex OE-5A
of Section 4 of the Bidding Bases and will be executed based on unit prices. In
case the Bid includes Works in addition to those established in Section 8 of the
Bidding Bases, such Works will also form part of the Purpose of the Contract.
CLAUSE 3.
ADDITIONAL REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATION AND WARRANTIES BY COMMISSION. Commission declares
and warrants to Contractor that:
(a) each of Representations A through G in the introduction of
this Contract are true and correct in all substantial aspects;
(b) execution and performance of this Contract by Commission have
been duly authorized with all the necessary
37
corporate shares, do not nor will further require any consent or approval by the
different areas of Commission other than those already obtained, and neither
execution of this Contract or performance by Commission of its obligations
derived hereof (i) will be in conflict or result in default or constitute a
violation or breach of any of the Applicable Laws or any agreement whereby
bonds, a mortgage, trust or any other instrument are issued, or a contract
(including without limitation, any clause that forbids lien or a similar clause)
entered by Commission or whereby it is bound, or to which any of its assets are
bound, or (ii) will result in creating or imposing any lien over any asset of
Commission;
(c) except for (i) authorization by Commission's Government Board, duly
obtained and in full force and effect, (ii) approval by the H. Chamber of
Deputies obtained in the Federal Expense Budget for Business Year 2002, (iii)
authorization by the Energy Secretariat to assume the commitments established in
this Contract, contained in official communication number 310.-0450 dated March
27, 2002, (iv) authorization by the Expense-Finance Intersecretarial Commission,
duly obtained and in full force and effect, (v) Permits listed in Annex 9
(already obtained or which Commission has no reason to consider will not be
obtained at the due time) and (vi) expert opinion referred to in article
38
56 of the Federal Expense Budget for business year 2002; no Permit by any
Mexican Government Authority according to the Applicable Laws in effect upon
signing this Contract is necessary for Commission to duly execute and fulfill
this Contract, or to make it legal, valid, obligatory or coercible;
(d) this Contract has been duly executed by Commission and, assuming
due authorization and execution of this Contract by Contractor, it constitutes a
valid, legal, obligatory and binding obligation for Commission, enforceable
according to such terms, in regard to enforceability, subject to the Law on
Bankruptcy and Reorganization and other generally applied Laws that affect the
rights of creditors, general principles of equity and subject to the limitations
established in Clause 3.1(g);
(e) there is no litigation or proceeding pending and Commission has no
knowledge of any threat of litigation or proceeding which, if resolved
unfavorably against Commission, could substantially and negatively affect its
operations or financial standing, or the validity, legality or enforceability of
the obligations for Commission under this Contract, or consummation of
operations provided for in this Contract. No action or proceeding filed, and no
order, decree, provision or resolution of any kind issued by any
39
Mexican Government Authority aimed at avoiding, restricting, or in any manner
preventing consummation by Commission of transactions contemplated in this
Contract;
(f) Commission's audited and certified financial statements for
business years 2000 and 2001, prepared by Commission's external auditors, have
been prepared according to accounting principles generally accepted in Mexico
applied in uniform manner, and are a true and precise representation of the
financial standing of Commission in respect to the dates and periods for which
they were prepared; and as of December 31, 2001 there has not occurred any event
whatsoever that resulted or may result in a substantial adverse modification in
the operations or the financial standing of Commission, or in the capacity of
Commission to performance its obligations according to this Contract;
(g) this Contract, as well as the operations contemplated herein
constitute activities over which Commission has supremacy, and is governed by
the administrative and civil laws applicable to private parties in respect such
activities; Commission will not enjoy any immunity in an judicial proceeding in
Mexico in respect to this Contract and operations contemplated through it,
either based on sovereign immunity or for any other reason, except for the
provisions of the Applicable Laws, in particular,
40
Article 4 of the Federal Code of Civil Proceedings, which provides that no
precautionary attachment, attachment to support execution of a sentence, or writ
of execution may be ordered by a Mexican court against any of the properties or
assets of Commission; and
(h) amounts to be paid by Commission in virtue of this Contract will
constitute general and direct obligations for Commission, with the same
preferential right of payment as any non-subordinated and non-secured External
Debt held by Commission.
3.2 REPRESENTATIONS AND WARRANTIES BY CONTRACTOR. Contractor declares
and warrants to Commission that:
(a) each of its Representations A through G of the introduction of this
Contract are true and correct in all substantial aspects;
(b) execution and performance of this Contract by Contractor has been
duly authorized through all necessary procedures and does not require nor will
require any consent or approval by various bodies of Contractor or by third
Parties beyond those already obtained, and do not breach nor will breach any Law
or provision of its corporate by-laws or other organic documents, or any
negotiable instrument, contract or agreement which it is a part of or whereby
its
41
assets may be affected;
(c) no Permit by any Government Authority is necessary for Contractor
to duly execute this Contract, and Contractor has no reason to believe that any
Permit required for performance of this Contract and that has not been obtained
will not be duly obtained;
(d) this Contract has been duly entered by Contractor and, assuming
that Commission has duly authorized and signed this Contract, it constitutes a
valid and binding obligation for Contractor, enforceable according to such
terms, subject in respect to enforceability, to the Laws on bankruptcy,
suspension of payments, reorganization and other Laws generally applied, related
to or that affect the rights of the creditors, and subject to the general
principles of equity;
(e) there is no proceeding pending and Contractor is not informed of
any threat or proceeding that could adversely and substantially affect validity,
legality or enforceability of the obligations for Contractor under this
Contract;
(f) each of the Participants has complied in all aspects with the
requirements of the Call and the Bidding Bases; all representations made and all
information delivered to Commission by or in representation of all and every one
of the Participants in relation to the Bid were and continue to
42
be true and correct in every substantial aspect; and such information does not
omit to manifest any fact necessary to prevent that such information altogether
be deceitful in view of the circumstances under which it was provided; and
(g) since the date when the Bid was presented there has not been any
substantial adverse change in the financial condition or any other condition of
any of the Participants, nor since that date has there been any change in the
control held by any of the Participants.
CLAUSE 4.
SCOPE OF OBLIGATIONS FOR CONTRACTOR
4.1. BASIC OBLIGATIONS. Contractor must, for its own expense carry out
all work necessary or adequate to develop the Project according to the
Specifications of the Contract, the Execution Schedule, Industry Standards,
Applicable Laws, and all other terms and conditions of this Contract. Works to
be executed by Contractor according to this Contract will, without limitation,
include:
(a) design, manufacture, construction, assembly, tests and putting into
service of the Units;
(b) design and construction of Civil Works of the Project which,
without limitation include the following main works: diverting works,
containment works, generation works,
43
surplus works, elevator substation works, auxiliary works for construction of
main works, and any other work that requires civil engineering in connection
with the Project, all of which must be developed as specified in Section 8 of
the Bases for Bidding;
(c) develop and supply to Commission all Engineering of the Works,
either in connection with Activities at Lump-Sum Price or Activities at Unit
Prices, according to Specifications of the Contract to assure integrity and
efficiency of the Units, as well as availability and future reliable operation
of the Units under maximum safety and exactly complying with all environmental
protection aspects;
(d) develop all risk, hydrological, geological, seismic, geotechnical,
structural and other pertinent analyses, which must be delivered at the start of
the engineering program, as well as topographical surveys and other studies and
reports mentioned in Annex 2;
(e) purchases, supply and transportation of all Materials, which must
comply with Specifications of the Contract;
(f) perform all inspections and tests of Materials while being
manufactured, prepared and transported, and in the site, as well as provide
Commission reports on those inspections and tests;
44
(g) complete all Civil Works and Electromechanical Works according to
Specifications of the Contract, either in connection with Activities at Lump-Sum
Price, or Activities at Unit Prices;
(h) while executing the Works, provide Commission all information
regarding Materials (including diagrams, construction procedures, quality
certificates, drawings, calculus records, tests performed and operating manuals,
if applicable) so that with such information Commission can perform any
inspection according to this Contract;
(i) execute all Associated Works, including but not limited to:
hazardous waste warehouse, scrap warehouse, flying ash warehouse,
electromechanical shop, pier including access road to ramp, dining room, major
replacements warehouse, high rotation items warehouse, IMSS clinic; the physical
safety works, which include dormitories, access control and surveillance booths,
lockers, gate arms, bumpers, surrounding fences and accessories, roads,
roadways; works included under social commitments; programs for reforestation,
rescue of species and other activities established by the applicable
Environmental Impact Resolution issued by the National Institute of Ecology; and
installation of the necessary infrastructure to supply electricity during
construction, from the 115/13.8 kV, 18.750 MVA 60 hz
45
substation which Commission will install; in the understanding that Contractor
must handle the corresponding procedures for supply of electricity during the
period of construction, assembly, tests and putting into services of work matter
of this Contract and, for its own expense pay for charges on account of such
supply;
(j) supply and carry out all Electromechanical Works, including but not
limited to, the executory design, supply, assembly, tests and putting into
service of the entire Main Equipment according to Specifications of the
Contract;
(k) develop and implant the Quality Assurance and Environmental
Protection Systems and provide Commission reports in connection with those
Systems;
(l) prepare and deliver to Commission Reports on Progress, import
permits, purchase orders, warehouse records and accounting ledgers;
(m) perform Tests (successful completion of putting into service) until
start of commercial operation of each of the Units;
(n) provide Technical Support to Commission and its employees and
workers, including without limitation, all know-how, documents, manuals,
instructions and training (including establishment of procedures, the
corresponding training and instruction) necessary or convenient so that
46
they may operate, handle and provide maintenance to the entire Station and
sustain its optimum capacity and maximum efficiency, in the most economic manner
and according to stringent safety and environmental standards;
(o) unconditionally grant to Commission, perpetually and free of
royalties or underlying fees, the right to use any patent or license in the
means such right is required in order to own the Station, operate it, improve,
expand or provide it maintenance according to this Contract and to practice in
industry, as well as grant Commission authority to transfer aforementioned
rights;
(p) repair or replace parts of the Works with faults or in poor
condition during execution of the Works or the applicable Warranty Period;
(r) comply with the Warranty of the Station, which includes repair or
replacement at all time until expiration of the Warranty Period, of all and any
part of the Station that does not comply with the Specifications of the Contract
or is faulty;
(s) deliver the Spare Parts according to Clause 22.5;
(t) together with Commission, duly record in the Record Book kept for
the Works, all activities matter of the Contract until Completion of the
Project, applying the general rules and aspects established in articles 93, 94,
95
47
and 96 of the Regulations of the Law on Public Works and Services Related to
These; and
(u) execute all Works offered in the Bid, including the additional
works established in Section 8.
4.2 IMPLICIT OBLIGATIONS. Obligations for Contractor in virtue of this
Contract will include all work and/or repairs, including hand labor and
materials not explicitly stipulated or described in this Contract, but that may
be inferred from the scope of this Contract as necessary or appropriate,
according to Standards of Industry, for satisfactory completion of the Project.
All work must be considered as Works within the scope of obligations for
Contractor under this Contract and will be included in the Price of the
Contract. Additional work required because of mistakes or omissions by
Contractor are not susceptible of being recognized, contracted and paid.
4.3 CONSIDERATIONS AND ADDITIONAL FACTORS. For execution of the Works
Contractor must consider all factors and considerations required in order to
fulfill the purposes of this Contract, including but not limited to recent
technology in the field, Commission's interest to punctually complete the Units
without affecting their quality, and the intention that the Units can be
operated, administered and managed
48
efficiently, safety and according to environmental norms in effect.
4.4 SPECIFICATIONS OF THE CONTRACT. It will be Contractor's
responsibility that Specifications of the Contract are adequate to achieve the
purpose of the Contract, and it will comply with the Specifications of the
Contract in executing the Works and completing the Project.
4.5 APPLICABLE LAWS. Contractor will execute the Works observing the
Applicable Laws, including without limitation, labor laws and regulations,
environmental and safety laws, laws on human settlements and urban development,
and will see that all subcontractors observe all the Applicable Laws in relation
with execution of the Works.
4.6 FINANCING. Contractor will be solely responsible for obtaining and
keeping valid, exclusively through its own means and without resorting to
Commission, all financing necessary to execute the Works and complete the
Project, in the understanding that (i) Commission will not grant any advance
payment or payment for progress achieved in the Works in respect to any Unit
before the Provisional Acceptance Date, and as long as this occurs on or before
the Project Completion Date or the date of early termination of the Contract,
and (ii) obligations for Contractor under this
49
Contract will by no means be subject to Contractor being able to obtain such
financing or achieve the Financial Closing.
Without limiting the scope of Contractor's obligations according to the
preceding paragraph, if Commission decides to obtain financing from Eximbanks or
Export Credit Agencies after Provisional Acceptance of the Works to satisfaction
has been granted, Contractor will be obliged to in due time and manner provide
to Commission all documentary information required for the latter to negotiate
aforementioned financing.
None of the provisions of this Clause will be construed as an
obligation or commitment for Commission to release Contractor of its exclusive
obligation to obtain financing to execute the Works, including without
limitation, its obligation to pay premiums, make advance payments and pay
commissions necessary to obtain such financing.
4.7 PERMITS AND SURVEYS. Contractor must duly obtain and keep in full
force and effect all Permits and surveys required according to Applicable Laws
in connection with the Project, including but not limited to all Permits and
surveys indicated in Annex 9 which Contractor must obtain. Contractor must
provide all information and documents reasonably necessary to assist Commission
in obtaining and keeping valid
50
the Permits which Commission must obtain according to Clause 6.2.
4.8 IMPORT TAXES; CUSTOMS DUTIES. Contractor will be directly
responsible and must pay for all taxes, customs duties and other charges
required to import, supply, transport and in-site installation of the Materials
or Main Equipment or equipment of the Electromechanical Works. It will also be
responsible for holding Commission harmless against any claim caused by unfair
practice in respect to acquisition of Materials, Main Equipment or equipment of
the Electromechanical Works and other imported equipment.
4.9 RECORD BOOK. Before starting the Works, Contractor and Commission
will establish the Record Book to make relevant annotations on development of
the project. Contractor must keep updated books and records on progress of the
Works as well as any incident that might occur in relation to them, including
accounting records. Such records must be available at all time for consultation
by Commission during the construction period of the Station.
4.10 CONTRACTOR'S OBLIGATIONS CONCERNING SAFETY, HYGIENE, THE
ENVIRONMENT AND CIVIL PROTECTION. While executing the Works, Contractor must:
(a) be entirely responsible for the safety of all
51
personnel authorized to be in the Site, keep the premises protected by Real
Estate Rights, and the Works in orderly condition to prevent endangering those
persons and comply with the Applicable Laws on safety and hygiene;
(b) for its own expense provide and keep all safety equipment, lights,
safety guards, walls and warning signs where and when justifiably required by
Commission, any Mexican Government Authority, or the Applicable Laws, to protect
the Works or for safety and convenience of Contractor's personnel, personnel of
Subcontractor, Commission's personnel, and the public in general;
(c) keep the premises protected by the Real Estate Rights free of any
unnecessary obstruction, storage or waste coming from all construction equipment
or of surplus materials, and clean and withdraw from those premises any debris,
waste or materials no longer required;
(d) observe all applicable environmental norms and building conditions
established in Resolution on Environmental Impact by the National Institute of
Ecology, including without limitation: discharge of waste water, disposal of
solid and/or hazardous waste, gas emissions into the atmosphere and noise
emissions;
(e) adopt all measures required to protect the environment inside and
outside the premises protected by the
52
Real Estate Rights, avoid damage or consequential injury against persons, public
properties or third party properties caused by contamination, noise or other
reasons derived from executing the Works, and develop restoration activities,
including dismantling of provisional works that were necessary to build the
Station;
(f) establish and implement rules in the Site subject to previous
written approval by Commission, to be observed in executing the Works in the
Site, including without limitation, Industrial Safety, control of access to the
Site, sanitary and hygienic measures, medical care and fire prevention;
(g) develop the Management System for Safety and Health at Work to
eliminate, minimize, prevent or control risks against the health and physical
integrity of personnel, as well as the safety of the Facilities, according to
Chapter 14 of the Specifications for Construction of Civil Works;
(h) be entirely responsible for final disposal of any waste generated
from the Works, informing Commission of such final disposal; and
(i) in regard to Civil Protection, Contractor must observe all
provisions of the Applicable Laws.
4.11 DEVELOPMENT, IMPLEMENTATION AND MAINTENANCE OF THE
53
QUALITY ASSURANCE SYSTEM AND OF THE ENVIRONMENTAL MANAGEMENT SYSTEM AND THE
INDUSTRIAL SAFETY SYSTEM (SACPASI). If Contractor is not certified according to
ISO-9000 and ISO-14000, NMX-SAST-001-IMMC-2000 standards or other similar
standards acceptable to Commission, Contractor must hire one or more independent
Subcontractors of recognized prestige, certified according to ISO-9000 and
ISO-14000, NMX-SAST-001-IMNC-2000 or other similar standards, and who will be
responsible for checking, directing and coordinating development and
implementation of all components of the quality assurance system, the
environmental administration system and the Industrial Safety System, who must
also confirm and see that the quality assurance system and the environmental
management system are fulfilled, through verifications, inspections and internal
quality audits. Commission may directly check that the Quality Assurance Manual
and the Environmental Management Manual are being fulfilled by Contractor, the
Subcontractors and Suppliers in developing the Works, and Contractor will be
responsible that the third party whom it hires periodically provide Commission
and Contractor information on inspection and surveillance work and help in
verifications, inspections and quality audits and audits of the environmental
management system,
54
that are in turn performed by Commission. Contractor's responsibility must be
clearly established in the Quality Assurance Manual and in the Environmental
Management Manual. In all cases it must observe the provisions of Chapter 14 of
the Building Specifications for Civil Works.
4.12 IMMIGRATION MATTERS. Contractor must adopt the necessary measures
to assure that all foreign personnel hired by itself or by Subcontractors or
Suppliers in relation to the Project have the necessary immigration
authorizations to work in Mexico.
4.13 DOMESTIC INTEGRATION. Contractor must comply with the domestic
integration percentage established in its Bid, according to Section 1.14 of the
Bidding Bases; by no means may Contractor substitute Materials included in the
Technical Bid without previous written consent by Commission, without Commission
being obliged to authorize such substitution; however, the latter will not
unjustifiably deny its authorization, with the previous opinion by the Economy
Secretariat. Any substitution of equipment, Materials and Suppliers made against
those originally offered by Contractor must be requested in writing to
Commission, indicating the technical and economic justification to request such
substitution. If Commission or the Economy Secretariat do not
55
provide an answer to Contractor within 15 days after the date when Commission
informs the Economy Secretariat of such circumstance, they shall be considered
as having accepted the substitution requested by Contractor. The Economy
Secretariat and the Comptroller and Administrative Development Secretariat,
within the scope of their attributions and the time when they determine, will
check performance of the level of domestic integration of the project altogether
and, as the case may be, instruct the Commission on correctly applying the
contract penalties. If on the Provisional Acceptance Date Commission determines
that domestic integration reached in the Works by Contractor is below the
percentage established in its Bid (84%), Contractor will pay Commission a
contract penalty equal to the amount that results from multiplying, by the sum
of the amount of the Price of the Contract at lump-sum price plus the total
amount executed at unit prices, fifty percent (50%) of the percentile points
obtained from the difference of the percentage established in its Bid and the
actual domestic integration percentage achieved by Contractor. The amounts
Contractor must pay according to this Clause 4.13 may be deducted by Commission
from any amount due or payable to Contractor under this Contract, or may be
collected by executing the Performance Warranty.
Contract penalties established in this Clause will not
56
be applied if the Works do not reach the domestic integration percentage for
justified reasons and Commission has granted Contractor express consent
according to the preceding paragraph.
4.14 LABOR OBLIGATIONS. Contractor and the Subcontractors, as employers
of personnel they employ to develop the Works, will be solely responsible for
all obligations derived from the Applicable Laws in labor and social security
matters. Contractor will be responsible for any claim filed by any of its own
workers or of the Subcontractors against Commission in relation to such
obligations and must indemnify Commission for any amount the latter must pay on
account of any of such claims, including attorney fees and other expenses
generated. In similar manner, as there will be workers hired by Commission and
by Commission's contractors involved in the Project, Commission will assume
labor contingencies that might arise against Contractor in respect to those
workers under the same terms as Contractor assumes those contingencies before
Commission.
CLAUSE 5.
SITE INSPECTION; REVISION OF DOCUMENTS
5.1 SITE INSPECTION. Contractor has inspected the Site and the
surroundings and obtained all information available
57
on the SITE and surroundings, and is fully informed and has taken into
consideration all matters, conditions and circumstances that affect the Contract
Price and performance of the Scheduled Provisional Acceptance Date for each of
the Units and the Scheduled Completion Date of the Project, including without
limitation, availability of means of transportation, availability of local
workers and obligations derived from hiring them, climatic and hydrological
conditions, soil characteristics, subsoil conditions and the Applicable Laws.
Commission will by no means be responsible for the condition of the Site for
development of the Works.
However, if hazardous or toxic waste were found in the site before the
Contract is signed, or if Contractor discovers these while executing the
Project, as long as not originated by Contractor or its Subcontractors, it shall
immediately notify Commission for the latter to resolve the situation.
5.2 REVISION OF DOCUMENTS. Contractor will be considered to have
revised the Specifications of the Contract, the Bidding Documents and all other
documents and information provided by Commission before the signature date of
this Contract and accepts they are adequate to execute the Works and performance
the purpose of this Contract.
58
5.3 NO RELEASE FROM RESPONSIBILITY. Default by Contractor to fully know
and taking into consideration all matters, data and information referred to in
Clauses 5.1 and 5.2 will not release it from its responsibilities derived from
this Contract and will not be a reason to increase the Contract Price or
introduce any modification in the Critical Event Dates or Contract
Specifications, unless there occurs an Act of God or Force Majeure, in order to
defer the Critical Event Dates, but not to increase the Contract Price.
5.4 USE OF SITE. Commission hereby authorizes Contractor to use the
Site required to execute the Works and described in Section 8 of the Bidding
Bases, in the understanding that Contractor will use the Site since date this
Contract is signed until the Project Completion Date. Contractor must respect
the limitations on use of the Site established by Commission and/or the Mexican
Government Authority.
CLAUSE 6.
OTHER OBLIGATIONS FOR COMMISSION
6.1 ACCESS TO THE SITE. Commission will permit Contractor and its
employees as well as Subcontractors and their employees access to the Site in
order that they may execute the Works according to the Contract, in the
understanding that Commission will not charge or pay for any
59
cost or charge for any additional, special or temporary installation required to
permit access to the Site or execute the Works.
6.2 PERMITS. Commission will duly obtain and keep in for force and
valid all Permits which are its responsibility as stipulated in Annex 9.
Commission will provide all information and documents in its possession
necessary to assist Contractor in obtaining and keeping valid Permits the latter
must obtain according to Clause 4.7.
6.3 ISSUE OF ACCEPTANCE CERTIFICATES. Commission will issue and provide
Contractor the Provisional Acceptance Certificates and Final Acceptance
Certificates as provided in Clause 19, once the conditions stipulated therein
have been performed.
6.4 COOPERATION IN EXECUTING THE PROJECT. Commission will do its best
to not unjustifiably cause any delay in the Project and cooperate with
Contractor in executing the Project.
6.5 DOCUMENTS TO FACILITATE FINANCING. Commission must provide all
documents and information concerning itself that are normally provided or are
reasonably appropriate for this type of operation according to market practice,
in order to expedite Contractor's obtainment of financing required for
60
the Project, in the understanding that (i) Commission will not be obliged to
provide any documents or information not normally available for its own
creditors; (ii) Commission will not be obliged to sign, grant or assume any
covenant, agreement, indemnity, declaration or any other obligation in
connection with any of such financing; and (iii) none of the provisions
contained herein will release Contractor from its exclusive responsibility to
obtain entire financing for the Project. Commission must provide those documents
and information as soon as possible after having received Contractor's written
request requiring such information, and Contractor must sign the confidentiality
agreements that Commission considers reasonably appropriate for the information
requested. Contractor must pay for reasonable costs and expenses, including
attorney fees, incurred by Commission in connection with preparing
aforementioned documents or information, as well as any other assistance which
Commission may provide at its sole discretion in respect to such financing.
6.6 PAYMENT OF CONTRACT PRICE OR TERMINATION VALUE. Commission will pay
the Contract Price or the Termination Value determined according to the terms of
this Contract.
6.7 NO ADDITIONAL OBLIGATION. Unless expressly provided
61
for in this Contract, Commission will have no any additional obligation
whatsoever in respect to execution of the Works.
6.8 SUPPLY OF ELECTRICITY. If Contractor requires supply of electricity
by Commission for construction and testing stages it must sign the respective
contracts with Commission's corresponding Distribution Division - Tepic Zone
according to the Laws, Regulations, Manuals and applicable legal provisions in
effect and make the corresponding payment.
Requests made by Contractor to Commission to sign the contracts must be
presented separately thirty days before for construction and sixty days before
for tests.
According to the Electric Power Public Services Manual, clause four,
regarding requests and signing of contracts for supply of electric power, these
must be presented in the offices or administrative agencies of the supplier of
the location where supply is requested.
If Contractor does not hire supply of electric power with Commission
for the constructing and testing stages, it must provide the electric power
required through its own means.
CLAUSE 7.
REPRESENTATIVES OF THE PARTIES
62
7.1 COMMISSION'S REPRESENTATIVES. After signing the Contract,
Commission will notify Contractor which persons will be responsible for
supervising design, and monthly verifying and certifying successful completion
of each item established by the Bidder in the Values Catalogue, as well as
notify and control deviations in this respect. A Project Head will be named to
supervise design and act as contact person with domestic offices for all matters
concerning design of the Project and the Contract, as well as coordinating
meetings with Commission's officers. A Supervision Resident will be named for
in-site supervision of the Project and will be responsible for keeping the
necessary control over supervision to achieve performance of specifications of
the Contract, and coordinate meetings called in the site to solve problems in
the Works. Through a notice issued to Contractor, the Supervision Resident may
delegate functions on various types of supervisors named Specific Work
Residents.
Contractor must fully cooperate with Commission's Representatives as
well as any third party designated by Commission in connection with any of the
inspection and supervision activities. None of the provisions stipulated herein
will be interpreted to release Contractor from any of its obligations and
responsibilities derived from the
63
Contract, in the understanding that by the fact that Commission's
Representatives exercise or do not exercise their rights derived from the
Contract will be not be considered that (a) Commission approves any of the Works
(b) Commission knows of any latent fault in the Station, or (c) Commission
waives any right or recourse.
To check that Contractor complies with the provisions of this Contract,
mainly among others, aspects established in article 197 of the Regulations of
the Law on Public Works and Services Related to These, Commission will develop
surveillance, control and supervision activities referred to in fraction I of
article 84 of aforementioned Regulations through the methods established in
Annex 23.
7.2 CHANGE OF COMMISSION'S REPRESENTATIVES. Through notification issued
to Contractor Commission may at any time substitute the Project Head,
Supervision Resident, Specific Work Supervision Residents, or any other third
party designated to assist the Specific Work Supervision Residents.
7.3 PROJECT MANAGER AND CONTRACTOR'S CONSTRUCTION SUPERINTENDENT. At
all time during execution of the Works Contractor must have a representative who
will as act project manager. Contractor hereby names Juan Jose Luis Grageda
Salinas as project manager, who enjoys the necessary
64
faculties to act on behalf of and representing Contractor, according to a
general power of attorney for administration acts and for lawsuits and
collections granted by Contractor in a manner that is reasonably satisfactory to
Commission, and to receive notifications issued by Commission. Any notification
thus issued shall be considered received by Contractor. Contractor hereby
designates Yury I. Veremeenko as superintendent of Electromechanical Works, and
Manuel Cortes Redondo as contruction superintendent ("Construction
Superintendents"). The project manager and Construction Superintendents must
have all experience necessary to handle and supervise execution of the Works.
The project manager and the Construction Superintendents must speak Spanish and
be dedicated full time to supervising the Works.
7.4 CHANGE OF PROJECT MANAGER AND CONSTRUCTION SUPERINTENDENT. Unless
the project manager ceases to be Contractor's employee, Contractor will not
substitute its project manager without previous written consent by Commission,
consent that may not be unjustifiably denied. If at any time while executing the
Works Commission reasonably considers that Contractor's project manager or any
of its assistants are not performing in their functions to the satisfaction of
Commission, or if Commission has any other
65
justified reasons, it may insist in substituting the project manager or any of
his assistants, or the assistant involved within the first ten (10) days after
Commission issues the request, in the understanding that the person named must
have the necessary experience and other requirements for the work and be
approved by Commission before assuming his activities.
CLAUSE 8.
CONSULTING COMMITTEE
No later than thirty (30) days after signing this Contract Contractor
and Commission will establish a committee formed by an equal number of high
level representatives designated by the parties, for consultation and progress
planning in the Project. The committee will meet promptly by request from one of
the parties to discuss and propose solutions in good faith and for all
technical, financial or administrative controversies concerning implementation
of the Project, without prejudice of the provisions of Clause 31.2 and 31.3.
Contractor and Commission will agree on procedures to be followed for efficient
operation of the committee established in virtue of this Clause 8. None of the
provisions of this Clause 8 may be construed to release Contractor from any of
its responsibilities under this Contract.
66
CLAUSE 9.
CONTRACT PRICE
9.1 CONTRACT PRICE AMOUNT. As total payment for executing Work of
Lump-Sum Price Activities, Commission will pay Contractor the lump-sum price of
US$682,517,584.80 Dollars(Six Hundred Eighty Two Million Five Hundred Seventeen
Thousand Five Hundred Eighty Four U.S. Dollars 80/100___), and for Unit Price
Activities Commission will pay Contractor US$65,773,072.59 Dollars (Sixty Five
Million Seven Hundred Seventy Three Thousand Seventy Two U.S. Dollars 59/100)
(the "Contract Price") plus corresponding value added tax.
The amount of US$65,773,072.59 Dollars (Sixty Five Million Seven
Hundred Seventy Three Thousand Seventy Two U.S. Dollars 59/100) corresponds to
works to be executed under the unit price method established in Annex OE-5A of
Section 4 of the Bidding Bases; US$_682,517,584.80 Dollars(Six Hundred Eighty
Two Million Five Hundred Seventeen Thousand Five Hundred Eighty Four U.S.
Dollars 80/100) corresponds to Works to be executed under the lump-sum price
method established in annexes OE-3, OE-4 and OE-5 of Section 4, and therefore
the amount includes remuneration or total payment to Contractor for all direct
and indirect expenses, profit and other expenses derived from this Contract. The
Contract Price that
67
corresponds to the lump-sum price method is a fixed activity and not subject to
any modification by any means whatsoever, unless cases when economic situations
of a general kind arise, that are manifest and duly proven to be alien to the
responsibility of the Parties according to the Law on Public Works and Services
Related to These. The Contract Price covers all Works to be provided or executed
according to this Contract, including all Works which, although not specifically
mentioned in the provisions hereof, may reasonably result necessary or adequate
according to Industry Standards for satisfactory completion of the Project.
9.2 PAYMENT OF THE CONTRACT PRICE. Annex 19 describes the distribution
of the Contract Price for each of the various Units. On the Contract Payment
Dates Commission will make the corresponding partial payment of the Contract
Price according to Clause 1.1 as specified in Clause 10.
Without prejudice of the provisions of the Law on Public Works and
Services Related to These, Commission will not pay for the corresponding
portions of the Contract Price until it receives the Works matter of the
Contract to its satisfaction and has issued the corresponding Provisional
Acceptance Certificates, that commercial use generates sufficient income to
comply with the obligations assumed.
68
9.3 VARIATIONS IN WORKS.
ADDITIONAL WORKS. According to article 59 of the Law on Public Works
and Services Related to These, Commission may ask Contractor to execute
additional work in connection with the Unit Price Activities for as much as 25%
of the Contract Price or more, subject to the provisions of the Law on Public
Works and Services Related to These, that corresponds to the unit price method
by signing an agreement at any time before Provisional Acceptance of the Unit in
question, as long as the additional work is not included in the scope of the
Contract nor is intended to modify or correct omissions or substantially modify
the project hired, and as long as there are reasons to technically justify
execution of the additional work could not be predicted and is necessary to
complete and operate the project.
REDUCTIONS IN WORKS. When requirements proper of the Works in
concerning completion of the Project do not require total development of Unit
Price Activities as offered by Contractor in its Bid, the Works will be
understood automatically reduced in the corresponding means.
CLAUSE 10.
PAYMENT
10.1 PAYMENT FORM. No later than 2:00 P.M. New York time
69
on the date when any part of the Contract Price, or if applicable, the
Termination Value is enforceable, Commission will pay Contractor, without any
deduction (except in respect to this Clause 10 or Taxes to be withheld according
to the Applicable Laws), the portion of the Contract Price or the applicable
Termination Value, as the case may be, in Dollars, through a wire transfer of
funds immediately available to the account in the City of New York, State of New
York, United States of America at the due time when indicated by Contractor to
Commission in writing, except in case of applicable added value tax, or unless
Contractor prefers that payment of the portion of the Contract Price or of the
applicable Termination Value be made in Pesos, in which case payment will be
made through a wire transfer of funds immediately available to the account in
the City of Mexico, Mexico indicated in writing at the due time by Contractor to
Commission, applying the exchange rate to settle foreign currency liabilities
published by Banco de Mexico (the Central Bank) in the Official Gazette of the
Federation on the date of payment. If any payment according to this Contract is
enforceable on a non-Banking Day, it must be made on the following Banking Day.
In case payment is made inside domestic territory, it will be in Mexican
currency and at the exchange rate in effect on the date when made. Payment of
the
70
Termination Value will be made within 30 days after the date when it is
determined, according to Clause 26.4.
10.2 FINANCIAL EXPENSES. If any part of the Contract Price or any
Termination Value and/or corresponding added value tax payable according to this
Contract, is not paid when due, at Contractor's request Commission must pay for
financial expenses at the Financial Expenses Rate; expenses that will be
calculated over amounts not paid and counted based on the days since the term
expired until the date when the amounts are made available to Contractor.
For any amount owed by the Parties in cases not expressly provided for
in this Contract, by request from the other Party, the debtor Party must pay
financial expenses at the Financial Expenses Rate over any amount due and not
settled, since the date when it should have been paid, until the date when
totally settled.
10.3 INVOICE AND VALUE ADDED TAX. When delivering the notification
referred to in Clause 18.1 requesting Provisional Acceptance Certificate for the
first Unit and Provisional Acceptance of the Station, Contractor must also
provide Commission an invoice for the portion of the amount of the Contract
Price applicable to such Work with the applicable value added tax, in the
understanding that the
71
portion that corresponds to value added tax must be in Dollars and will be
payable in Pesos, applying the exchange rate considered to settle foreign
currency liabilities published by Banco de Mexico in the Official Gazette of the
Federation on the date when payment is made. Commission will be responsible for
accepting transfer of value added tax that corresponds to the invoice.
10.4 SURPLUS PAYMENTS. If Commission makes any payment to Contractor in
excess of amounts payable according to this Contract, such surplus payments must
be reimbursed to Commission in the currency in which Commission made such
surplus payments through a wire transfer of funds immediately available to the
account indicated at the due time by Commission to Contractor. Reimbursement
will be considered an enforceable debt in favor of Commission and generate
accessories charges at the Financial Expense Rate. Charges will be calculated
over surplus amounts paid in each case and counted according to the days passed
as of the date of payment until the date when the amounts are actually made
available to Commission.
10.5 DOCUMENTS RELATED TO EXIMBANK SOURCES OF FINANCING OR OTHER EXPORT
CREDIT AGENCIES (ECA'S). Contractor recognizes that Commission may obtain
financing with guaranty
72
from an Eximbank or any other export credit agency (ECA) in respect to payments
it must make to Contractor under this Contract. If so requested by Commission,
Contractor must provide Commission directly or through a banking institution
duly notified by Commission, the documents and information referred to in Annex
15 related to the purchase abroad of Materials or Main Equipment and hiring of
services, including if necessary, information and documents Commission may
require to assume financing referred to in Clause 4.6, in the understanding that
such information and documents must be delivered by Contractor to Commission as
soon as possible, but under no circumstances beyond the first sixty (60) days
after the date of payment made by Contractor for the Materials, Main Equipment
or services in question. If Contractor does not duly provide Commission the
information and documents required according to this Clause 10.5, Commission may
suspend issue of the corresponding Provisional Acceptance Certificate until it
has received aforementioned required information and documents.
10.6 RIGHT TO COMPENSATION. Commission will have the right to
compensate against any payment owed to Contractor under this Contract, any
amount owed to Commission by Contractor in virtue of any provision of this
Contract or in
73
another manner according to the provisions of Article 2185 of the Federal Civil
Code and other Applicable Laws.
10.7 WITHHOLDINGS. Commission will withhold the following amount
against any payment it must make to Contractor according to this Contract: (i)
an amount equal to five to the thousandth (.005) of the total amount of the
Contract Price according to the applicable provisions of the Federal Law on
Charges in effect at the time of payment, amount that will be delivered to the
Federal Treasury Department according to the requirements of such Law and
applied to pay services in connection with inspection, monitoring and control of
public works by the Comptroller and Administrative Development Secretariat.
CLAUSE 11
ADJUSTMENT IN COSTS
Commission and Contractor recognize that work included in the Contract
under the unit price payment method, that is, Activities at Unit Prices, will
not be subject to the cost adjustment established in the Law on Public Works and
Services Related to These and its Regulations, in virtue that quotation of such
work derives from basic cost elements appraised in Dollars, and therefore, the
Contractor expressly waives the right to adjust costs at the price of
74
aforementioned work. Such work will only be subject to a cost adjustment
according to the guidelines issued by the Comptroller General's Office, as
provided for in article 59 of the Law on Public Works and Services Related to
These.
Commission and Contractor recognize that the part of work included in
the Contract at lump-sum price, that is, Activities at Lump-Sum Price, will only
be subject to a cost adjustment according to the guidelines issued by the
Comptroller General's Office, as provided for in article 59 of the Law on Public
Works and Services Related to These.
CLAUSE 12.
PERFORMANCE WARRANTY; QUALITY WARRANTY
12.1 DELIVERY OF WARRANTIES.
(a) Within fifteen (15) Days after the date when Contractor received
the notification of the Decision, for its own account and expense Contractor
must provide Commission (i) a bond issued in favor of Commission by a bonding
company authorized according to the Federal Law on Bonding Institutions, or
otherwise (ii) an unconditional and irrevocable letter of credit in favor of
Commission, issued by a top rate bank satisfactory to Commission, either of
these for an amount equal to ten percent (10%) of the investment amount
authorized for the first business year,
75
amount which it will be notified of by Commission within the first five (5) days
after the Decision is announced, to guaranty due, proper and absolute
performance by Contractor of all its obligations derived from this Contract
other than its obligations established in Clause 21 (the "Fulfillment
Warranty").
For subsequent years, for its own account and expense, within the first
fifteen (15) days after Commission notifies Contractor of the investment amount
authorized for the corresponding year, Contractor must provide Commission (i) a
bond issued to Commission by a bonding company authorized according to the
Federal Law on Financial Institutions, or (ii) an unconditional and irrevocable
letter of credit in favor of Commission, issued by a top bank satisfactory to
Commission, any of these for an amount equal to ten percent (10%) of the
investment amount authorized and notified by Commission.
Contractor may present letters of credit issued by a bank that does not
legally operate in Mexico, provided such bank is rated at least "A" by Standard
and Poor's (or any equivalent) and as long as Commission can collect the
Fulfillment Warranty in Mexico or in the City of New York, State of New York,
United States of America. If the letter of credit is issued by a bank that does
not legally operate in
76
Mexico, it must be reported or notified by a bank legally operating in Mexico.
(b) For its own account and expense, before Provisional Acceptance of
each of the Units, Contractor must provide Commission one of the following
guaranties to secure due and absolute performance by Contractor of all its
obligations derived from this Contract according to Clause 21 (the "Quality
Warranty").
(i) a bond issued in favor of Commission by a surety company authorized
according to the Federal Law on Bonding Institutions,
(ii) an irrevocable, unconditional letter of credit issued in favor of
Commission by a first rate bank, satisfactory to Commission, in the
understanding that Contractor may present letters of credit issued by a
bank that does not legally operate in Mexico, provided such bank is
rated at least "A" by Standard and Poor's (or any equivalent) and
Commission can collect the letter of credit in Mexico or in the City of
New York, State of New York, United States of America. If the letter of
credit is issued by a bank that does not legally operate in Mexico, it
must be reported or notified by a bank legally operating in Mexico; or
77
(iii) make a cash deposit in a trust established for such purpose.
The amount of the Quality Warranty must at all time be the same as the
product of (A) the value of the Works, determined by reference to the Values
Catalogue, that corresponds to the units which obtained Provisional Acceptance,
but that have not obtained Final Acceptance, and (B) ten percent (10%) in case
of the bond referred to in section (i) above, or five percent (5%) in case of
the letter of credit referred to in section (ii) above, or five percent (5%) in
case of the trust referred to in section (iii) above.
12.2 FORM AND DURATION. The Fulfillment Warranty and the Quality
Warranty must be established in the forms contained in Annexes 16 and 17
respectively, The Fulfillment Warranty must continue in effect until the Project
Completion Date. The Quality Warranty will remain in effect until the Final
Acceptance Certificate of the Last Unit has been issued.
12.3 COLLECTION OF WARRANTIES. Commission will be entitled to collect
the Fulfillment Warranty and the Quality Warranty in order to collect (i)
contract penalties, (ii) reimbursements of surplus amounts paid by Commission,
(iii) any amount owed by Contractor to Commission and (iv) payments of
indemnities owned by Contractor to Commission according to
78
Clause 23 (or in case of payments for indemnities not determined for
responsibilities claimed against Commission and for which Contractor is
responsible according to Clause 23, amounts reasonably estimated by Commission
that will be further owed by Contractor), holding harmless the rights of
Commission that have not been covered, which will be collectible according to
the terms of the penultimate paragraph of article 66 of the Law on Public Works
and Services Related to These, and articles 60 through 68 of the Regulations of
such Law. In case the Fulfillment Warranty or the Quality Warranty is a letter
of credit and Commission collects the Fulfillment Warranty or the Quality
Warranty for any of the reasons specified above, Commission will notify
Contractor of the amount withdrawn and the corresponding reasons, and in respect
to the Fulfillment Warranty, Contractor will have ten (10) Working Days since
the Fulfillment Warranty was collected, to replace its amount to the amount in
effect the time immediately before having been collected by Commission. If the
Fulfillment Warranty is a bond, Contractor will have ten (10) Working Days since
the Fulfillment Warranty was collected, to replace its amount to the amount in
effect at the time immediately before having been collected by Commission.
Contractor will only be obliged to replace amounts collected of the Fulfillment
Warranty for
79
as much as the original amount of the Fulfillment Warranty and the accumulated
amounts resulting from replacements made by Contractor reach a limit equal to
twenty percent (20%) of the Total Cost of the Project. Failure by the credit or
bonding institution to pay the Warranty will not release Contractor of its
obligation to increase the Warranty, on account of replacement, by the same
amount as that collected.
Surplus amounts of Warranties collected by Commission over amounts
actually justified will be reimbursed to Contractor.
CLAUSE 13.
SCHEDULE FOR EXECUTION OF THE WORKS
13.1 START AND DEVELOPMENT ACCORDING TO THE EXECUTION SCHEDULE.
Contractor will begin the Works on March 26, 2003 and execute the Works
according to the Execution Schedule in order to comply with all Critical Event
Dates and achieve the Provisional Acceptance Date of each of the Units on or
before the Scheduled Provisional Acceptance Date, and complete the project on or
before the Scheduled Project Completion Date, with a period of 1620 Days to
execute the Works. The Works must be completed August 31, 2007.
13.2 COORDINATION PROCEDURE. Within the first thirty (30) Days after
this Contract is signed, both Commission's
80
and Contractor's representatives will meet to discuss all matters of common
interest, including but not limited to all matters concerning coordination of
the Project. During the meeting the Contractor will provide Commission a
coordination procedure based on internationally accepted standards, as well as
on the procedures and guidelines established in Annex 18. The coordination
procedure must be strictly fulfilled during development of the Works.
13.3 ADJUSTMENTS IN CRITICAL EVENT DATES. In addition to the provisions
of Clause 27.3, the Critical Event Dates may be adjusted according to the
following:
(a) If Contractor is prevented from reaching any Critical Event on the
applicable Critical Event Date due to an Act of God or Force Majeure, the
Critical Event Date affected will be extended according to the period affected,
which will not exceed the period of such delay, in the understanding that
Contractor must provide Commission a written request specifying the Act of God
or Force Majeure in question and how it has delayed performance of such Critical
Event Date within the first seven (7) Days after the date when it is informed or
should have been informed that the Act of God or Force Majeure in question
occurred. The Critical
81
Event Date will not be extended if Contractor does not issue the request on
time.
(b) If Contractor is prevented from reaching any Critical Event on the
applicable Critical Event Date because of any act or omission by Commission
(including, but not limited to obtainment by Commission of Permits for its
account according to Annex 9; as well as lack of Tests for reasons attributable
to Commission or lack of water in the reservoir), the Critical Event Date
affected will be extended for a period not to exceed the period of the delay, in
the understanding that Contractor must provide Commission a written request
specifying the Act of God or Force Majeure in question and how it has delayed
performance of the Critical Event Date within the first seven (7) Days after the
date when it is informed or should have been informed of the occurrence of such
act or omission. The Critical Event Date will not be extended if Contractor does
not issue the request on time.
13.4 MONTHLY PROGRESS REPORTS. Within the first ten (10) Days after the
end of each Month, since the date when the Contract is signed and until the
Month when the Project Completion Date occurs, Contractor will issue an Progress
Report and deliver it to Commission through its Supervision
82
Resident and the Specific Work Resident in original copy, with copy to the
Assistant Departments of Construction and Development Projects, describing
progress in Work during the immediate previous Month, which must be reconciled
with the Supervision Resident and the Specific Work Supervision Residents before
being distributed, and must include the following information concerning the
Month in question:
(a) a report on the condition and performance of all Permits under its
commission, including a declaration that the Permits have been obtained; the
condition of requests being processed, and a declaration concerning performance;
(b) an administrative report in print and electronic file showing real
progress in Works compared to the Execution Schedule, including allocation of
financial results;
(c) an Engineering Report describing critical activities developed, any
existing or foreseeable delay and measures undertaken to correct it, which
includes files of specifications, final tables and purchase orders of Materials
and Main Equipment already placed with graphs of progress (scheduled and real)
using procedure R02-1;
(d) an itemized list of Materials control indicating the condition of
every purchase order for Materials with the name of the Supplier or
manufacturer, the part of equipment implicated, purchase order date, expected
delivery date,
83
certificates of origin of Materials, which will be used to prove the content of
domestic integration as specified in Section 1.14 of the Bidding Bases, as well
as any payments made by Contractor to the Supplier (providing Commission all
documents that evidence such payments) and the condition of any investigations
made in this respect;
(e) a report on construction, summarizing any difficulty occurred in
the Site and delays incurred in executing the Works, explaining action
undertaken or proposed by Contractor to solve such difficulties or overcome
those delays;
(f) a photographic report of the condition of the Civil Works and of
the Electromechanical Works;
(g) a report summarizing compliance with the Quality Assurance Manual,
the Environmental Management Manual and the Industrial Safety Manual;
(h) an itemized answer to any request made by Commission in order to
assume action in connection with the Works;
(i) a tentative schedule indicating action to be undertaken by
Commission concerning its operations underway, in virtue of Works expected to be
executed by Contractor during the next six-week period; and
(j) a monthly report on progress in integrating the domestic
integration component.
84
Commission will recognize monthly advance in construction for the
purposes Contractor consider convenient before its Creditors, which will be
determined based on the Monthly Advance Report Contractor must submit according
to this Clause 13.4; Commission does not acquire any debt liability for this
recognition of monthly advance until the Payment Date of the Contract or date of
early termination.
13.5 ADDITIONAL MEASURES. If through an inspection of the Works
Commission determines that the Works show substantial delays in respect to the
Execution Schedule that are not attributable to an Act of God of Force Majeure,
or because of an act or omission attributable to Commission, the latter shall
have the right, but not the obligation, to notify Contractor of such
circumstance through the Supervision Resident or the Specific Work Supervision
Resident, asking that the adequate measures be undertaken, including without
limitation, that they hire more workers, use more or better equipment, implement
more than one work shift, use more advanced methods, faster means of
transportation to receive the Materials and Main Equipment, or introduce other
similar measures to assure punctual progress in the Works to the satisfaction of
Commission, all of which will be for Contractor's sole expense.
85
13.6 DAMAGE BECAUSE OF DELAYS.
13.6.1 FOR THE LUMP-SUM PRICE PART OF THE CONTRACT. If
Provisional Acceptance of any Unit occurs on or before the corresponding
Scheduled Provisional Acceptance Date, and provided such delay is not due to an
Event of Default by Commission or an Act of God or Force Majeure, as contract
penalty for the delay Contractor must pay Commission the amount which results
from calculating the amounts indicated below per Day attributable to Work
delayed, in the understanding that the maximum aggregated amount payable
according to this Clause 13.6 in respect to delay in obtaining Provisional
Acceptance of each Unit will be up to two percent (2%) of the Contract Price,
with a maximum accumulated three percent (3%) limit of the Contract Price.
(a) for each of the first, second, third, forth and fifth Weeks of
delay in achieving Provisional Acceptance of the Unit in question, Contractor
must pay Commission an amount equal to ONE HUNDRED THOUSAND DOLLARS (U.S.)
US$100,000.00 per Day;
(b) for each of the sixth, seventh, eighth, ninth and tenth Weeks of
delay in achieving Provisional Acceptance of the Unit in question, Contractor
must pay Commission an
86
amount equal to THREE HUNDRED THOUSAND DOLLARS (U.S.) US$300,000.00 per Day; and
(c) as of the eleventh Week of delay in achieving Provisional
Acceptance of the Unit in question, Contractor must pay Commission an amount
equal to ONE MILLION DOLLARS (U.S.) per Day, until reaching an maximum
accumulated amount of penalties equal to two percent (2%) of the Contract Price
by each Unit, without exceeding the maximum accumulated three percent (3%) limit
of the Contract Price.
If any of the Critical Events subject to Penalty indicated in Section
2.1.21 do not occur on or before the corresponding scheduled Date as established
therein, and provided the delay is not due to an Event of Default by Commission
or an Act of God or Force Majeure, on the Scheduled Provisional Acceptance Date
of the First Unit, as contract penalty for the delay Contractor must pay
Commission an amount calculated by applying the following amounts based on the
number of Days delayed for the periods indicated below, in the understanding
that the maximum aggregate accumulated amount payable according to this Clause
13.6 in respect to delay in any Critical Event subject to Penalty will be up to
four percent (4%) of the Contract Price:
(a) for each of the first, second, third and fourth Weeks of delay in
complying with the Critical Event subject
87
to Penalty, Contractor must pay Commission an amount equal to FIFTEEN THOUSAND
DOLLARS (U.S.) US$15,000.00 per Day;
(b) for each of the fifth, sixth, seventh and eighth Weeks of delay in
complying with the Critical Event subject to Penalty, Contractor must pay
Commission an amount equal to SEVENTY-FIVE THOUSAND DOLLARS (U.S.) US$75,000.00
per Day;
(c) from ninth Week of delay in complying with the Critical Event
subject to Penalty, Contractor must pay Commission an amount equal to ONE
HUNDRED FIFTY THOUSAND DOLLARS (U.S.) US$150,000.00 per Day, until reaching an
accumulated amount for penalties equal to four percent (4%) of the Contract
Price.
Penalties for delays in Critical Events subject to Penalty applicable
to Contractor as established in this Clause 13.6 will not be enforced if
Contractor achieves Provisional Acceptance of the first Unit on or before the
Scheduled Provisional Acceptance Date of the first Unit.
If for reasons attributable to Contractor the Final Closing of the
diversion tunnels does not occur on or before the Scheduled Final Closing Date,
provided such delay is not due to an Event of Default by Commission or an Act of
God or Force Majeure, and this causes delays in Provisional Acceptance of the
Units, Commission will not recognize
88
payment of Financial Expenses for not paying the Contract Price on the scheduled
payment dates.
For its own account and expense Contractor must provide to Commission
within fifteen (15) days after the delay in the above-mentioned events of this
Clause 13.6, including without limitation, delay in achieving Provisional
Acceptance of the Units, an additional unconditional and irrevocable letter of
credit in favor of Commission, issued by a top bank satisfactory to Commission
for an amount equal to the difference between the percentages established in
Clause 12.1 (10%) of investment amount authorized for the corresponding business
year) and ten percent (10%) of the Contract Price. If Contractor does not
provide the additional letter of credit before such date, this will be
considered a Breach by Contractor according to the provisions of Clause 26.1.
13.6.2 FOR THE UNIT PRICES PART OF CONTRACT. The following penalties
will be applied in case of delay:
If as a consequence of the comparison made in the last month of the
Schedule in force (Form OE-11-A) against the amount of work executed, there is
work delayed and still not finished, a contract penalty will be applied, of 2%
(two percent) of the amount of work delayed by the number of
89
months passed since the month when such work is delayed, until the last month of
the Schedule in force.
If Contractor does not include the works of the part at Unit Prices on
the termination date indicated in the Schedule in force, as contract penalty it
must also pay Commission the amount of two to the thousandth of the amount of
work not duly executed, for each day of delay.
13.7 PAYMENT OF PENALTY. Penalties on delay in Provisional
Acceptance of any Unit established in Clause 13.6 will be paid by Contractor to
Commission on the first Banking Day at the end of each Week of delay in
obtaining Provisional Acceptance of the Unit in question.
Penalties on delay in Critical Events subject to Penalty established in
Clause 13.6 will be totally paid by Contractor to Commission on the next Banking
Day after the Scheduled Provisional Acceptance Date of the first Unit.
Penalties on delay in the part of Unit Prices established in Clause
13.6 will be payable by Contractor to Commission in their totality on the next
Banking Day after the Scheduled Provisional Acceptance Date of the first Unit.
All amounts to be paid by Contractor according to this Clause 13.7 will
be compensated by Commission with any amount owed or payable to Contractor under
this Contract in case
90
Contractor has not paid for them as provided in this Clause with the
corresponding Financial Expense Rate.
13.8 COLLECTION OF PENALTIES. None of the provisions of this Clause
13 will prevent Commission from exercising its right to terminate the Contract
according to Clause 26. If such termination occurs Commission will be entitled
to collect the corresponding penalties according to Clause 13.6 and also enforce
the Fulfillment Warranty as established in Clause 26.4.
13.9 NON-RELEASE FROM LIABILITY. Payment or deduction of any amount
owed by Contractor according to Clause 13.6 will not release Contractor from any
of its obligations or responsibilities under this Contract.
CLAUSE 14.
ENGINEERING
14.1 DEVELOPMENT OF ENGINEERING. Contractor will develop
Engineering according to the Contract Specifications, using the international
unit and measurement system according to article 5 of the Federal Law on
Metrology and Norms, previously experimented industrial know-how and following
Industry Standards. Contractor must (a) according to Section 8 of the Bidding
Bases, prepare the Preliminary Project Record that, among others, will contain
Engineering, the
91
schedule for preparing and delivering Engineering, warranted data, essential
diagrams, general layouts and design criteria, and within eight (8) days after
signing this Contract, deliver eight (8) copies of that record to Commission,
and (b) within twelve (12) Weeks after signing this Contract, provide Commission
the Quality Assurance Manuals, Environmental Management Manual, itemized quality
plans for Engineering and Design. Contractor will provide in original and three
(3) copies, Engineering, drawings, calculus records, specifications and other
technical documents as stipulated in Section 8 of the Bidding Bases with the
schedule contained in the Technical Bid (Annex 11). Commission may issue
proposals in order to modify aforementioned documents no later than thirty (30)
Days after the respective document is delivered to Commission. In such case
Contractor will introduce the proposed modifications, except for those that are
not reasonable or go beyond Specifications of the Contract. Contractor must
manifest its reasons if it does not take into consideration the comments issued
by Commission concerning information being revised. If Commission does not issue
any proposal to modify the documents within aforementioned term, it will be
considered to have accepted the documents presented by Contractor. In any case,
Contractor will be solely responsible for the
92
documents in question. In case of delay in providing the information, Commission
will be entitled to charge contract penalties according to Annex 13 of this
Contract for such delay.
14.2 DELIVERY AND PROPRIETORSHIP OF ENGINEERING. Commission will be
the owner of all information included or integrated in Engineering, including
calculus records and copies of all documents to be provided to Commission by
Contractor according to Clauses 14.1 and 19.1, whereof proprietorship will be
transferred to Commission at the time of Provisional Acceptance of the Unit in
question or, if this occurs before, the moment when this Contract is terminated.
Commission will be free to use and dispose of that information for any purpose
and in any manner related to operation, improvement, expansion, maintenance and
use of the Station and in any other property of Commission, in the understanding
that Commission will hold Contractor free of any responsibility that might arise
in connection with any use given by Commission to such information and were not
related to the Project or operation of the Units and/or Station.
CLAUSE 15.
MATERIALS AND MAIN EQUIPMENT
93
15.1 SUPPLY OF MATERIALS AND MAIN EQUIPMENT. Contractor will supply
all Materials and Main Equipment necessary to complete the Works and be
responsible for administration, handling, transportation and due maintenance
during storage, of the Materials and Main Equipment. Any Material or Main
Equipment lost or damaged while during transportation or storage, or in
development of the Works, will be repaired or substituted by Contractor, in the
understanding that in case such loss or damage is not covered by the insurance
Contractor must hire according to Clause 24, or is above the coverage of such
insurance, Contractor will in any manner respond for the total cost of such
repair or substitution. Any surplus material may be withdrawn by Contractor once
the work implicated has been completed.
15.2 QUALITY. All Materials and Main Equipment supplied by
Contractor must be new and comply with the Contract Specifications. In cases
when the Materials or the Main Equipment are not specified in the Contract
Specifications, Contractor will supply those Materials and Main Equipment so
that they are adequate for the purpose where they will be used and their
resistance to conditions they will come in contact with (including elements,
pressure and chemical substances) has been proven. The quality of Materials and
94
Main Equipment supplied by Contractor according to this Contract may be checked
at any moment by Commission, observing the applicable provisions of Chapter 14
of the Civil Works Construction Specifications.
15.3 PURCHASE ORDERS. Contractor will provide Commission copies of
all purchase orders of Materials and Main Equipment within seven (7) Days after
the date when the respective purchase order was issued, which must have the
necessary information to identify the Materials and Main Equipment in question
and contain written reference to the Project. Contractor will make sure that the
purchase orders specify Commission will be entitled to assume Contractor's
position as buyer of the Materials or Main Equipment in question through the
notification issued by Commission to the Supplier involved upon termination of
this Contract, and that Commission intends to receive transfer of that purchase
order from Contractor (including without limitation, all warranties and
obligations of services from the Supplier), in the understanding that the
purchase order implicated will remain without any modification whatsoever and
the Supplier must not require any additional warranty from Commission. For
purchase orders to be considered part of the Termination Value
95
according to Annex 14, it will be essential that the purchase orders include the
provisions of this Clause 15.3.
15.4 SELECTING SUPPLIERS. Contractor will require that
Subcontractors and Suppliers establish and apply a quality assurance system in
their work and manufacturing processes to assure Supply of Materials and
services complies with the Contract Specifications, and through audits and
periodical inspections must check that Subcontractors and Suppliers comply with
the above. Contractor assures that the Subcontractors and Suppliers have the
capacity to provide service and prompt maintenance for Materials in the Site
before any purchase order is placed for any Material to the Suppliers mentioned
in the Technical Bids, who may not be substituted without previous written
consent by Commission, in the understanding that (i) Commission will be entitled
to reject any Supplier of Materials mentioned in the Technical Bid within thirty
(30) Days after the date when this Contract is signed, (ii) Commission will
approve or reject any substitute Supplier of Materials within fifteen (15) Days
after the date when Commission receives notification of that substitution from
Contractor, which must include information and documents necessary according to
the Quality Assurance Manual to prove the required quality of the Materials in
96
question, as well as the technical and economic justification to require such
substitution, (iii) if requested by Commission, Contractor must sign evidence
confirming that the Supplier fulfills the technical standards required to comply
with the Contract Specifications, and (iv) Commission will not be obliged to
authorize such substitution, however, neither will it unjustifiably deny it.
Regardless of the above, every Supplier of Main Equipment must have storage
facilities for replacement parts in Mexico and must be able to provide
maintenance or technical assistance in the site within twenty-four (24) hours
after any request is received from Commission. It is also agreed that before
Contractor issues any purchase order for Main Equipment it will submit in
writing for approval by Commission, the name of the Supplier whom it proposes
for acquisition of such Main Equipment. If Commission does not notify Contractor
in writing that it objects against the Main Equipment in question being acquired
from the Supplier proposed within ten (10) Working Days after the date when it
received Contractor's proposal, Commission will be understood to have approved
that Supplier and Contractor will proceed with the prospective purchase order.
Commission will not deny its approval to any proposed Supplier of Main Equipment
without a justified reason. Commission's written notification to
97
Contractor manifesting that it does not agree on acquiring the Main Equipment in
question from the Supplier proposed (i) must be issued within the term mentioned
above and specify the reasons for objecting, and (ii) will bind Contractor to
refrain from placing the purchase order with that Supplier and propose another
Supplier until acceptance from Commission is obtained. By request from
Commission, Contractor will sign a certificate to be provided by Commission,
certifying fulfillment by any Supplier of Main Equipment proposed by Contractor,
in relation to technical standards required to comply with Contract
Specifications.
15.5 TRANSPORTING AND IMPORTING MATERIALS AND MAIN EQUIPMENT. For
its own risk, Contractor will transport the Materials and Main Equipment to the
Site with the means of transportation it consider most appropriate based on
circumstances of the case, and will be responsible for obtainment, if necessary,
of any Permit for such purpose. Commission will reasonably do its best to help
Contractor in obtaining those Permits from the Mexican Government Authorities.
For its sole account and risk Contractor will be responsible for making any
adaptations required in roads, bridges, or any other communicating route
necessary to transport the Materials or Main Equipment to the Site. In
98
addition, for its own expense Contractor must import the Materials and Main
Equipment from the points of origin and will be responsible for their legal
importation. If the Applicable Laws require that any request be issued on behalf
of Commission, the latter will assume the necessary measures to comply with
those Applicable Laws and promptly do its best to provide support in cases where
required by Contractor to fulfill its obligations in importing Materials or Main
Equipment.
15.6 GAUGING AND LANGUAGE. All meters, markers, registers and any
other indicators must be gauged according to the international units and
measurements system as established in article 5 of the Federal Law on Metrology
and Norms. Instruction plates must be in the Spanish language.
CLAUSE 16.
INSPECTION AND TESTS OF MATERIALS,
OF MAIN EQUIPMENT AND OF THE WORKS
16.1 INSPECTION AND TESTS. Contractor will be responsible for
inspecting, testing and certifying all Materials, the Main Equipment and the
Works for its own expense and at any appropriate time, including during
manufacture and assembly upon arrival at the Site, and during construction and
assembly in the Site, assuring that all
99
Materials, Main Equipment and the Works are according to the Contract
Specifications. Contractor must only hire inspectors duly qualified for such
purpose, and before hiring them Contractor must present a request with an
itemized list containing the rating and experience of those inspectors for
Commission to revise and authorize within no more than 30 Days. All inspection
reports and certificates will be made available to Commission when requested by
the latter. If any of the Materials, Main Equipment or Works or part of these do
not pass the inspection or test, Contractor will rectify or replace them, and
after notifying Commission in this respect, will repeat the inspection or test.
In case of damage of the Materials or Main Equipment, Contractor will
immediately obtain the necessary replacements for its own expense.
16.2 ACCESS. Supervision Residents or Specific Work Supervision
Residents and the persons whom they designate will have access at any reasonable
moment, with prior notification issued to Contractor at least three (3) Working
Days before, to Contractor's plants and facilities where the Materials or Main
Equipment are being manufactured or prepared to inspect them or witness the
tests. If any part of the Materials or the Main Equipment were being prepared or
manufactured in plants or facilities not belonging to
100
Contractor, Contractor will obtain permission for the Supervision Residents or
whoever these designate to inspect or witness tests of those Materials or Main
Equipment in the plants or facilities.
Within the scope of their attributions and the time when they
determine, representatives from the Economy Secretariat and the Comptroller and
Administrative Development Secretariat will have access at any reasonable
moment, with previous notice issued to Contractor at least three working days
before, to comply with functions described in Section 1.14 of the Bidding Bases.
16.3 INSPECTION AND REPORTS SCHEDULE. Contractor and Commission
will prepare a schedule specifying the date and place to inspect and test the
Materials, Main Equipment and the Works. Contractor will notify Commission 20
Days before each of the inspections or tests, which will be performed during
working hours. Commission may send a representative to be present during the
inspection or tests; otherwise, Contractor will proceed with the scheduled
inspection or test and provide Commission all corresponding reports and
documents. If the reports are not satisfactory or Commission has any doubt about
them, it may ask Contractor to perform additional inspections or tests, as long
as those additional
101
inspections or tests do not prevent progress in the Works. The costs of those
additional inspections will be for the account of Contractor, in the
understanding that if no faulty Materials, Main Equipment or work are detected
while performing the additional inspections Commission will be responsible for
the cost.
16.4 CONTRACTOR'S OBLIGATIONS DURING INSPECTIONS AND TESTS. For its
own expense Contractor will provide Commission all necessary help, hand labor
and instruments and make all necessary arrangements to efficiently perform the
inspections and tests.
16.5 REJECTION OF FAULTY MATERIALS, MAIN EQUIPMENT AND SYSTEMS. If
while inspecting or executing the Works there appear any Faults in any
Materials, Main Equipment or System, or these produce faults, or do not comply
with the Contract Specifications, Commission may (notwithstanding any previous
inspection or test), reject those Materials, Main Equipment or Systems and ask
Contractor to immediately replace or repair those Materials, Main Equipment or
Systems free or any additional cost or expense, in order to assure fulfillment
of the Contract. If requested by Commission, Contractor will for its own expense
repeat inspection and tests of the Materials, Main Equipment or Systems rejected
before deciding in this
102
respect.
16.6 COVERING THE WORKS. None of the Works will be covered or
placed out of sight without prior approval by Commission. Contractor will notify
Commission when any of the Parts is ready to be covered or placed out of sight,
and Commission will check that part of the Works within the three (3) Working
Days after receiving the notification from Contractor. If Commission does not
perform the inspection within that period, these will be presumed accepted by
Commission (except for further test to the contrary) and Contractor will proceed
to cover them. The above term will not apply to concrete, earth fills and
rockfills, once the Quality Manuals and Contract Specifications define the
procedures and tests to be performed in those works.
16.7 SUBSTITUTION OF FAULTY MATERIALS, MAIN EQUIPMENT OR WORKS. If
at any time before Provisional Acceptance of the Station Commission has reasons
to consider that Works related to the Station have Faults, Damage, or in any
other manner do not fulfill the Contract Specifications, Commission will be
entitled to issue Contractor a written request to disassemble and replace or
rebuild the parts of the Works in question and perform any additional tests
which, in the opinion of Commission are necessary according to Industry
Standards for
103
those parts of the Works to comply with the Contract Specifications. If
Contractor does not agree to the request by Commission, the parties will submit
the dispute to an expert opinion issued according to Clause 13.2. If Contractor
agrees with Commission's request or if the expert opinion issued according to
Clause 13.2 reports the request is well-founded, Contractor will as soon as
possible dismantle and rebuild or replace the faulty parts of the Works and all
expenses and costs derived from those operations will be for Contractor's
account. If the respective expert opinion reports that Commission's request was
unfounded, Contractor will not dismantle and rebuild or replace any part of the
Works and any Critical Event Date that has been affected will be extended
according to Clause 13.3(b) by the same number of Days as the Works were
suspended to obtain the expert opinion.
16.8 DEFAULT OF INSTRUCTIONS. In case of default by Contractor in
promptly executing instructions issued by Commission and, as the case may be,
supported by the expert opinion according to Clause 16.7, Commission will be
entitled to hire other Persons to execute them, having previously notified
Contractor, and all duly documented expenses resulting from or related to this
will be reimbursed to
104
Commission by Contractor within the first thirty (30) Days after Commission asks
Contractor for the reimbursement based on the corresponding Financial Expense
Rate since the time when disbursed.
16.9 NON-RELEASE FROM RESPONSIBILITY. No inspection, test or
approval by Commission according to this Clause 16, or omission by Commission in
inspecting or rejecting any part of the Works will in any manner whatsoever
release Contractor from duly fulfilling its obligations or reduce its
responsibility according to this Contract. Under all circumstances Contractor
will continue to be responsible for the precision, quality and integrity of the
Works and for their adequate development according to this Contract.
CLAUSE 17.
CONSTRUCTION
17.1 RESPONSIBILITY FOR CONSTRUCTION. Contractor must carry out
complete construction of the Hydroelectric Exploitation, as well as assemble and
install the Station according to the Execution Schedule and Contract
Specifications, and provide in the Site all of Contractor's competent personnel
and Equipment necessary to develop the Works. No more than sixty (60) Days
before beginning to develop the Civil Works, except for diversion works,
105
Contractor must present a Complementary Schedule of the Execution Schedule and
critical route, describing the following: itemized schedule of infrastructure
necessary to build the Project, such as aggregate and concrete processing parts,
shops, camps and storage platforms; schedule of Permits necessary to execute the
Project; schedule of construction roads (underground and exterior); schedule
manufacture and supply of electromechanical equipment and systems; itemized
schedule of activities for structure and substructure according to construction
procedures integrated in the SAC.
17.2 ESTABLISHING THE WORKS. Contractor will be responsible for
correctly and adequately establishing the Works in connection with the reference
topographical points, coordinates and lines, which will be determined by
Commission and Contractor. If at any moment during advance of the Works there
appears any mistake regarding the position, level or alignment of the Works,
Contractor must notify Commission of the mistake and proceed to rectify the
mistake to the satisfaction of Commission, for the sole expense of Contractor.
17.3 CLEANING OF THE SITE. While developing the Works Contractor
must at all time keep the Site free of unnecessary
106
obstructions and store or withdraw any materials, remove from the Site any
debris, waste or temporary work, and withdraw any of Contractor's Equipment or
any provisional facility used to develop the Works and that is no longer
required to execute the Works. Contractor must also restore any area that has
been affected inside as outside the Site by edification or removal of
aforementioned provisional facilities. Contractor will be responsible for
cleaning, withdrawing and clearing the Site as soon as possible, but in any case
before the Provisional Acceptance Date of the Unit in question, as well as
dispose of, according to the Environmental Laws in effect or as indicated by the
corresponding Government Authority, any waste or hazardous waste generated by
Contractor or its Subcontractors during the construction period of the Station.
17.4 INSPECTION AND SUPERVISION. Commission will be entitled to
inspect and supervise the Works, in the understanding that such inspection and
supervision do not prevent progress in the works.
17.5 DAMAGE TO COMMISSION OR THIRD PARTIES. Contractor will be
responsible for any damage caused to Commission or any third party derived from
building the Works, and will hold Commission harmless from any claim or suite
filed
107
according to articles 1931 and 1932 of the Federal Civil Code, or established by
the Applicable Laws in any other analogous manner.
CLAUSE 18.
TESTS
18.1 PUTTING INTO SERVICE TESTS. When the construction and
installation Works have been completed, Contractor will carry out the Putting
into Service Tests for every equipment, system and/or unit of the Station, which
must be according to the Execution Schedule and the provisions of Annex 13.
18.2 OPERATING TESTS. Having successfully carried out the Putting
into Service tests Contractor will perform the Operating Tests of all and each
Hydroelectric Exploitation equipment and particularly, equipment of the Station,
which must be according to the Execution Schedule and the provisions of Annex
13.
18.3 PERFORMANCE TESTS. When all Putting into Service Tests and the
Operating Tests have been successfully performed, Contractor will carry out the
Performance Tests in one of the Units of the Station, which must be according to
the Execution Schedule and the provisions of Annex 13. If Contractor is unable
to carry out the Performance Tests and if the Station does not comply with the
Performance
108
Warranties on the first time when the Performance Tests are carried out,
Contractor may proceed as necessary so that the Station complies with those
warranties and again perform the Performance Tests for its own expense, as long
as it notifies Commission that it intends to perform those tests at least
fifteen (15) Days before, as provided for in Clause 18.4.
18.4 TESTS SCHEDULE. For information purposes Contractor will
provide Commission its definite Tests Schedule and the date when these are
planned to begin, at least sixty (60) Days before those scheduled activities.
Contractor will also notify Commission that it intends to perform the Tests
required for the Station at least fifteen (15) Days before the date when it
actually pretends to carry them out. Within four (4) Days after receiving
aforementioned notification, Commission will notify Contractor that it is in a
condition to receive the power generated during the Tests in a manner compatible
with prudent practice in industry. If Commission is not able to receive the
power on the date proposed, Commission will put forth all reasonable efforts to
obtain a solution for this as soon as possible and as reasonably practical under
the circumstances. Contractor will not be applied a penalty according to this
Contract for not complying with the Critical Event Dates related to
109
Provisional Acceptance of the Units in the means that such default is because
Commission does not receive the power generated from the Tests, unless this
situation were caused by Contractor, and it will be understood that Contractor
has complied with the Critical Event Dates to Provisional Acceptance of the
Units.
18.5 PERSONNEL. Contractor will provide all supervision and
technical personnel, and hand labor to perform the Tests. During the Tests
Contractor will employ Commission's maximum operations personnel available. This
will apply in regard to all permanent equipment of the Station that will be
activated by operators of that Station, which will be done under Contractor's
responsibility until Provisional Acceptance is obtained. Commission will be
entitled to obligate its technical and operating personnel to participate in
performing the Tests.
18.6 CONTRACTOR'S RESPONSIBILITY AND OBLIGATIONS. Since termination
of the Tests according to the terms of the Contract and until the Project
Completion Date, the Station must be operated under Contractor's responsibility
and supervision according to Commission's requirements and operating manuals,
and instructions issued by Contractor. Contractor will assume all responsibility
over precision of
110
instructions and directions which it issues during that period. During that
period Commission will only be responsible for deceitful acts or serious faults
by personnel provided by itself according to Clause 18.5 above.
18.7 CHARGES ON DELAYS. If for reasons attributable to Contractor a
Test is extended beyond the period theretofore established in the Execution
Schedule, Commission will be entitled to charge Contractor for expenses in which
it incurred and are reasonably proven for work and electricity, among others,
supplied by Commission in connection with that Test, regardless of any other
right or recourse derived from that situation in favor of Commission in virtue
of this contract or the Applicable Laws.
18.8 INTERRUPTIONS ATTRIBUTABLE TO CONTRACTOR. If a Test is
interrupted for any reason attributable to Contractor, the Test will be
initiated and developed from the start by Contractor immediately after the
interruption, under the same terms and conditions as established in this
Contract, and reasonable documented expenses and costs incurred by Commission in
relation to the part of that Test repeated will be reimbursed to Commission by
Contractor.
18.9. OTHER INTERRUPTIONS. If any Test were interrupted for any
reason attributable to Contractor, at its entire
111
discretion Commission may ask Contractor either to (a) complete the rest of the
Test and when satisfactorily completed Contractor will be considered to have
fulfilled its obligations in respect to the Test in question, or (b) reinitiate
and develop the Test since the start, in which case Commission must reimburse to
Contractor within five Days after the first Payment Date according to Clause
1.1, having previously received the corresponding invoice with the supporting
documents, for the costs, including financial costs and reasonable and
documented expenses incurred by Contractor in connection with the part of that
Test that has been repeated.
18.10 UNSATISFACTORY RESULTS. If during the Tests one of the Units
were found to not comply with the Contract Specifications, without prejudice of
its obligation to comply with the Execution Schedule, for its own expense
Contractor will make all necessary adjustments and repairs in the Station and
repeat the corresponding Tests immediately after making those adjustments and
repairs. All costs and reasonable and duly documented expenses incurred by
Commission in the repetition must be reimbursed to Commission by Contractor no
later than the Schedule Completion Date.
18.11 REJECTION OF THE WORKS. Commission will be
112
entitled to reject any part of the Works that does not comply with the Contract
Specifications. If Contractor does not agree to the rejection, the parties will
submit the dispute to an expert opinion issued according to Clause 31.2. If
Contractor agrees to the rejection, or if according to Clause 31.2 the expert
opinion by the Independent Expert determines the rejection was well-founded,
Contractor will as soon as possible proceed to remove and withdraw such Works
and all expenses and costs resulting from these operations will be for
Contractor's account. If the Independent Expert determines the rejection was
well-founded, Commission will then accept them according to the procedure
established in Clause 19.1 If Contractor does not comply with the obligation, at
its sole discretion Commission will be entitled to replace the Works rejected by
itself or to trust a third party to execute them, and costs derived from the
withdrawal or replacement must be reimbursed to Commission by Contractor when
completed according to the corresponding Financial Expense Rate since the moment
when disbursed. Until the new works have been installed or provided Commission
will be entitled to withhold the rejected Works and to operate the Station, in
which respect Contractor will not be entitled to any payment whatsoever on
withholding or use of the Station.
113
18.12 REPAIR OR REPLACEMENT OF THE WORKS. Every time Contractor must
make any rectification, repair or replacement in the Works according to this
Clause 18, it must immediately notify Commission in writing, indicating how it
plans to develop them. Through joint agreement the parties will determine what
Works must be developed to rectify any Faults as well as the manner of executing
them, in the understanding that this will be performed based on the lowest total
cost criteria considered by the parties. In case they do not reach an agreement,
the parties will submit the dispute to the Independent Expert according to
Clause 31.2. Contractor will cover all costs of rectifying, repairing or
replacing the Works, as well as costs necessary to repair all other parts of the
Works damaged by the corresponding rectifications, repairs or replacements.
18.13 DAMAGE TO THE ENVIRONMENT. Except for any other damage arising
from any act or omission by Commission, or any other of Commission's
contractors, Contractor will be responsible for any damage caused to the
environment derived from the Works and/or Tests and, according to Clause 23(a),
must pay for any repair or restoration required by the Applicable Laws or the
competent Mexican Government Authorities.
114
CLAUSE 19.
ACCEPTANCE
19.1 PROVISIONAL ACCEPTANCE. Regarding any Unit, once (i) all the
Works related with the subject Unit have been completed and the proper operation
of its Main Equipment (except for the Works to be executed under Clause 21),
according to the Contract's Specifications, including without limitation the
Technical Tests and Support (other than those required by Clause 20.2) as well
as the supply of the total of the Spare Parts; (ii) the Commission has received
ten (10) printed copies and five (5) electronic copies on 3.5" magnetic discs or
optical discs (CD-ROM) of the Final Book of Documents pertaining to said Unit,
using a word processor compatible with the systems used by the Commission (IBM
PC or 100% compatible equipment) using, for text, the MS Word for Windows
package, version 6.0 or higher, for spreadsheets, the Excel 6.0 or higher
package, for drawings Autocad 2000 or higher, and for images, any format
compatible with the Windows 95 operative system, (iii) the Contractor has
provided the documentation related with the financing sources according to
Clause 10.5, and (iv) the Quality Warranty has been delivered and continues in
force according to Clause 12; the Contractor shall deliver to the Commission a
notice
115
requesting that a certificate be issued that certifies the Provision Acceptance
of the respective Unit ("Provisional Acceptance Certificate"). Within the
fifteen (15) Days following reception of said notice, the Commission shall
verify the due completion of the Works, and once the above has been done, the
Commission shall prepare the release in terms of article 64 of the Law of Public
Works and Services Related with Them, proceeding to issue the respective
Provisional Acceptance Certificate within a term of 15 Days, unless within said
period the Commission notifies the Contractor that it does not agree with the
fulfillment of the conditions for its issuance. If the dispute has not been
solved within an additional period of fourteen (14) Days from the Commission's
notice, this shall be submitted to the Independent Expert for solution according
to Clause 31.2. The Date of Provisional Acceptance of any Unit shall be (i) the
date of issue of the respective Provisional Acceptance Certificate; (ii) in the
case of a dispute in which the Independent Expert determines that the conditions
for issuance of the Provisional Acceptance Certificate were fulfilled at the
moment that the Contractor gave the notice to the Commission according to this
Clause 19.1, the Provisional Acceptance shall be considered to have taken place
fifteen Days after the date of reception of said notice
116
by the Commission; or (iii) to the effects of penalties against the Contractor
for delay according to Clause 13.6, the Provisional Acceptance Date shall be
considered to have taken place at the moment on which the Commission received
the Contractor's notice requesting issuance of the Provisional Acceptance
Certificate, provided that (a) the Commission had issued the Provisional
Acceptance Certificate related with the respective Unit; or (b) the Commission
had not issued the Provisional Acceptance Certificate of the subject Unit,
within the term of fifteen Days established in this Clause and had not notified
the Contractor that it disagreed with the fulfillment of the conditions for its
issuance, within the term established in this same Clause. At the Date of
Completion of the Project, the care, the Commercial Operation, the custody and
the control of the Station, as well as the risk of loss of the same shall be
transferred to the Commission, considering the provisions of clause 18.6 (in the
understanding that any loss resulting from Faults or hidden flaws in the Works
shall the Contractor's responsibility).
19.2 NO RELEASE OF LIABILITY. In no event shall the Provisional
Acceptance of a Unit release the Contractor from
117
fulfillment of any of its obligations nor decrease its liability according to
the terms of the present Contract.
19.3 REMOVAL OF THE CONTRACTOR'S EQUIPMENT. From the Provisional
Acceptance of the Last Unit and up to the Date of Completion of the Project, the
Contractor shall withdraw and remove from the Site involved all of the
Contractor's Equipment, excess material and wastes, and shall leave the work
area clean and in adequate working conditions to the Commission's satisfaction,
with the understanding that the Contractor shall be entitled to keep at the Site
the Contractor's Equipment that it may require in order to fulfill its
obligations during the Warranty Period applicable to the Units. If the
Contractor defaults within said term without justification on making the removal
or the equipment from the Site, the Commission may perform it by itself or
through a third party, at the Contractor's expense or through execution of the
Fulfillment Warranty of the Quality Warranty.
19.4 MINOR FAULTS. To determine whether all the conditions
necessary for issue of the Provisional Acceptance Certificate related with the
Station have been satisfied, the parties are expected to identify faults in the
Works executed regarding the Station. Minor faults shall be considered to be
118
those that do not affect negatively the safety, reliability and operation of the
Station, which shall not need to be corrected as a condition for issuance of the
respective Provisional Acceptance Certificate. However, the Contractor shall
correct or complete said minor faults to the Commission's reasonable
satisfaction as soon as possible, but in no case after forty five (45) Days
following the respective Date of Provisional Acceptance. If the Contractor is
unduly delayed in making the corrections to the minor faults, the Commission may
make them by itself or through a third party, at the Contractor's expense or
through execution of the Fulfillment Warranty or the Quality Warranty.
19.5 UNSATISFACTORY PERFORMANCE. In the event that the Performance
Tests evidence default on the Guaranteed Net Capacity, the Commission shall be
entitled to charge to the Contractor, within the limits established in Clause
21.11, the contractual penalties that apply according to Annex 13. In the event
that the deficiencies that may arise from the comparison of proven guaranteed
values are such as to entitle the Commission, according to the provisions of
Annex 13, to collect contractual penalties for a global amount equal to, or
higher than five percent (5%) of the Contract Price. The Contractor shall have
the obligation to make the necessary
119
adaptations and repairs to obtain Net Guaranteed Capacity according to the
equation in subsection 2.2.10, section 2 of the Bidding Rules, no later than the
Scheduled Project Completion Date, as long as this capacity is not obtained the
payment of the remaining 40 % of lump-sum price part of the Contract shall not
apply.
In the event of not obtaining Net Guaranteed Capacity before the
Scheduled Project Completion Date, the Commission shall proceed to adapt the
Contract Price proportionally according to Performance Tests compared to power
offered by Contractor for the Units. To determine the Contract Price to be paid,
power calculated with measured values of the Units will be divided by power
calculated with the values of Units offered by Contractor in its Bid, and this
result will be multiplied by the Contract Price, in the understanding that this
adjustment will not be considered a contract penalty.
19.6 FINAL ACCEPTANCE. Regarding any Unit, the Commission shall
issue in favor of the Contractor a certificate that establishes the Final
Acceptance of said Unit (the "Final Acceptance Certificate"), when presentation
by the Contractor to the Commission takes place of (a) the release in writing
related with said Unit to which Clause 21.10 refers, (b) a certification that
the payrolls, invoices
120
for Materials, for the Main Equipment and other debts related with the Works,
that might be guaranteed by the Commission, have been paid or satisfied in any
other way, (c) at the Commission's request, any other information that
establishes the payment or satisfaction of the obligations, such as receipts,
releases or cancellation of encumbrances derived from the Contract in the
measure and form that the Commission may have stated, (d) evidence that the
Contractor has made all the corrections or substitutions indicated by the
Commission according to Clause 19.4 above, (e) evidence that the Warranty Period
has ended, and that the Contractor has provided satisfactorily the Warranty of
the subject Unit and (f) eight (8) printed copies and one electronic copy in
CD-ROM format of the Station's Manual according to Annex 5. If, having satisfied
the conditions established in this Clause, the Final Acceptance Certificate is
not issued by the Commission without just cause within a term of [fifteen (15)]
Days, the Contractor may demand in writing that it issue the Final Acceptance
Certificate and if the Commission does not do so within the fifteen (15) Days
following reception of said application, the Final Acceptance Certificate shall
be understood to have been issued to all legal effects. In case a dispute
arises, the provisions of Clause 31.2 shall apply.
121
CLAUSE 20.
TECHNICAL SUPPORT AND TRAINING
20.1 SUPPORT PRIOR TO PUTTING INTO SERVICE. Prior to practicing the
Putting into Service Tests for each Unit, the Contractor shall provide, at its
sole expense, in cooperation with the respective Subcontractors and Suppliers,
training and qualification sessions to the employees or workers of the
Commission, according to the terms of Annex 1 of this Contract.
20.2 SUPPORT FROM THE PROVISIONAL ACCEPTANCE. When the Commission
so requests, the Contractor shall provide at its sole expense, in cooperation
with the respective Subcontractors and Suppliers, operational assistance to the
Commission's employees and workers, at the Site or at the Commission's offices
that this last may designate, during the Warranty Period applicable to the
Station. The Commission may request the Contractor to expand the preceding
terms, in the understanding that in this last case, the costs of additional
operational assistance shall be assumed by the Commission. The operational
assistance shall include among others the following activities: interpretation
of manuals; technical assistance by specialized personnel to problems not
contemplated or resolved by the operation manuals (in those
122
cases where the personnel's physical presence is required, it shall be taken
into consideration); providing the information necessary to solve operational
problems not contained in manuals and according to the manner in which the
installation was made.
CLAUSE 21.
WARRANTIES AND WARRANTY PERIOD
21.1 WARRANTY OF WORKS. The Contractor guarantees that the Works
related with the Station and each of the Units, once the Provisional Acceptance
has been obtained, shall comply strictly with the Contract's Specifications, and
that they shall be fabricated and performed according to the Industry Standards
in technically efficient and complete manner. Notwithstanding the formal
reception of the Works, the Contractor shall continue obligated to answer for
the Faults that might arise from them, for hidden flaws, and for any other
liability in which it might have incurred, in the terms stated in the present
Contract and in the Federal Civil Code.
21.2 PERFORMANCE WARRANTIES. The Contractor guarantees that each
Unit will succeed in complying with the Performance values. Default on any
Performance Warranty shall entitle the Commission to collect the contractual
penalties established
123
in Annex 13. While the Operation Warranties are in force, the Contractor may
verify that the Station is operated by the Commission according to the Station's
operation manual. If any abnormality is found in the Station's operation, it
shall so report to the Commission, which shall correct said abnormality. In case
of dispute, the provisions of Clause 31.2 will apply.
21.3 ACCESS TO THE SITE. After the works related with the Station
have been completed and once the Provisional Acceptance of the Units has been
attained, the Commission shall allow to the Contractor all necessary access to
the Site for the purpose of having the Contractor fulfill its obligations
established by virtue of this Clause 21. The Contractor shall, with approval
from the Commission (which may not be refused without just cause) remove from
the Site any Material or Main Equipment that has a Fault, if the nature of the
Fault is such that the repair cannot be made rapidly within the Site during the
applicable Warranty Period. Subject to prior approval by the Contractor, which
shall not be refused without just cause, the Commission shall have the right to
repair at the Contractor's expense minor faults in the Works, through the
respective discount against the Quality Warranty.
124
21.4 EXPANSION OF THE WARRANTY PERIOD. If any Unit cannot generate
electric power partially or totally or cannot be used partially or totally due
to a Fault or Malfunction, the Warranty Period for said Unit shall be expanded
automatically, as many times as may be necessary, for a period equal to the time
during which the Unit cannot be used by the Commission partially or totally or
cannot generate electric power partially or totally. Besides, the proper
operation of the Main Equipment or of the Materials that may have to be repaired
or replaced during the Warranty Period, as well as its lack of Faults or
Malfunctions, shall be guaranteed by the Contractor for the term of two (2)
years and as many times as may be necessary, from the repair or replacement
involved upon being free of Fault an/or Malfunctions. In this case, the
Commission shall be entitled to ask the Contractor for a letter of credit for
the amount of the equipment and materials for which the Warranty Period is
expanded, thereby ensuring the fulfillment of the proper operation warranty and
the absence of Faults and Malfunctions of the Main Equipment or of the Materials
that may have to be repaired or replaced during the expanded Warranty Period.
21.5 REPLACEMENT DURING THE WARRANTY PERIOD. The Contractor, after
receiving a written notice from the
125
Commission, at its sole expense and according to the Contract's Specifications,
shall restore, fix or replace as soon as may be possible those parts of the
Works related with the Unit that were determined as ineffective or defective
during the respective Warranty Period. Within a term of not more than
forty-eight (48) hours, the Contractor shall inform the Commission of the
approximate time in which the repairs shall take place. During the period in
which the Contractor is executing said additional Works, the Commission shall be
entitled to retain and use the defective Works and to maintain the involved Unit
into operation, in such measure that this results in a lower total cost.
Besides, the Contractor shall, as soon as possible but in no case beyond the
forty-five (45) Days following issuance of the respective Provisional Acceptance
Certificate, correct any minor fault according to Clause 19.4.
21.6 DEFAULT BY THE CONTRACTOR TO MAKE REPLACEMENTS. If the
Contractor should fail to comply with its obligations according to Clause 21.5,
then, besides any other right or remedy that the Commission may have, by virtue
of this Contract or of the Applicable Laws, the Commission shall be entitled to
execute the required Works or any part thereof by itself, or to entrust them to
a third party and their cost
126
shall be reimbursed to the Commission by the Contractor, or else, the Commission
may execute the Quality Warranty or the Fulfillment Warranty, within the term to
which clause 21.5 refers.
21.7 WARRANTIES FROM THE SUBCONTRACTORS AND THE SUPPLIERS. Whenever
possible, the Contractor shall obtain the warranties granted by the
Subcontractors and Suppliers directly to the name of the Commission or ensure
that said warranties may be assigned to the Commission after the Provisional
Acceptance of the subject Unit. At the time of the any Unit's Final Acceptance,
the Contractor shall assign to the Commission all the warranties that remain in
force and that it was not possible to assign at the time of the Provisional
Acceptance of the respective Unit.
21.8 CLAIMS AGAINST SUBCONTRACTORS AND SUPPLIERS. During the
Warranty Period the Contractor shall have the responsibility to file the
necessary claims and to enforce the warranties of the Subcontractors and
Suppliers, without prejudice to the provisions of Clause 21.7. The Commission
shall enforce the warranties directly against the Contractor, and the Contractor
shall be responsible for fulfillment of any warranty granted by it or by any
Subcontractor or Supplier. In the event that a warranty from a Subcontractor
127
or Supplier covers a matter not guaranteed by the Contractor or that exceeds the
scope of what is guaranteed by the Contractor, the Contractor shall be
responsible for collecting and enforcing said warranty against the Subcontractor
or Supplier in benefit of the Commission. The Commission shall be responsible
for filing the necessary claims and enforcing the warranties obtained
exclusively to its name and that were assigned to it, so that the Commission
will be the only one with legitimacy to enforce them.
21.9 LIMITATIONS OF THE WARRANTIES. The Contractor shall not be
liable for Faults or Malfunctions in the Station, the Works or the Materials
that are caused by normal wear and tear, by inappropriate or inadequate
operation or maintenance of the Station, by negligence or unauthorized
alterations to the Works or to the Materials, except for works performed by the
Commission or third parties according to Clause 21.6.
21.10 RELEASE OF WARRANTIES. Within the five (5) Days following the
end of the Warranty Period of any Unit, the Contractor and the Commission shall
sign a written release that confirms that the pending obligations during the
Warranty Period have been satisfied.
21.11 MAXIMUM APPLICABLE LIMITS TO CONTRACTUAL PENALTIES. The
contractual penalties that the Commission may
128
impose upon the Contractor shall be subject to the following limits:
(a) The maximum global amount of contractual penalties applicable
for delays in the delivery of documents, drawings and other technical data
mentioned in Annex 13, shall be equivalent to twenty five hundredths of one
percent (0.25%) of the Price of the Contract.
(b) The maximum global amount of contractual penalties applicable
default on the Performance Warranties plus the penalty for less content of
national integration shall be equivalent to five percent (5%) of the Price of
the Contract.
(c) The maximum global amount of contractual penalties applicable
for delays in the Scheduled Dates of Provisional Acceptance, in the Critical
Events Subject to Penalty and in part to Unit Prices shall equivalent to twelve
and twenty five hundredth percent (12.25%) of the Price of the Contract.
(d) Without prejudice to the provisions of items (a), (b), and (c)
of this Clause 21.11, the maximum global amount of contractual penalties
applicable for the sum of all the concepts shall be equivalent to fifteen
percent (15%) of the Project's Total Cost.
(e) The maximum global amount of contractual penalties applicable
for default on supply of the Spare Parts according to Clauses 22.6 and 22.7,
shall be equivalent to one hundred
129
percent (100%) of the market value of the Spare Parts not supplied according to
Clauses 22.6 and 22.7 plus thirty-five percent (35 %) of the Commission's
overhead, or the price offered by the Contractor, whichever is higher.
CLAUSE 22.
CONTRACTOR'S PERSONNEL AND EQUIPMENT AT THE SITE; SUPPLY OF SPARE PARTS
22.1 EXPERIENCED PERSONNEL. In order to fulfill its obligations
under the present Contract, the Contractor shall maintain in charge of the Works
an adequate number of duly trained employees, whether they are professionals,
technicians, supervisors or workers, who have had ample experience in works
similar to those contemplated in the present Contract.
22.2 SUTERM. In order to ensure compliance with clause 42 of the
Collective Labor Contract between the Commission and the SUTERM, the Contractor
shall use for positions that are not of confidence the services of personnel
affiliated to the SUTERM for development of the Works. The labor relations
between the Contractor and its workers affiliated to the SUTERM shall be
governed by the collective labor contract that the Contractor enters into with
the SUTERM before
130
starting construction of the Station, in the contract form established to that
effect in Annex 7.
22.3 OTHER OBLIGATIONS OF THE CONTRACTOR. The Contractor shall: (a)
take all the reasonable steps to prevent illegal, seditious or objectionable
behavior by its personnel and by the personnel of the Subcontractors or
Suppliers, in order to maintain discipline among them at the Site; (b) comply
with all applicable Laws, including, by way of enunciation but not of
limitation, those related with social security, labor matters, environment,
health and civil protection; (c) ensure that each of its supervision employees
cooperates fully with the Commission and with any third party involved in works
at or near the Site and in the areas where the Works are taking place, in order
to avoid difficulties and delays in the execution of the Works; and (d) inform
the Commission immediately and in detail of any accident that may take place at
the Site. Default on this Clause 22.3 shall result in the removal and
replacement, by the Contractor, of the supervision personnel who may be at fault
(by supervision personnel of equal level and technical experience) within the
seven (7) Days following that of reception of any written request sent by the
Commission. Especially, without limiting the generality of the above, the
Contractor shall remove and
131
replace immediately any supervision employee regarding whom the Commission has
informed the Contractor that he is endangering the progress of the Works due to
lack of experience, cooperation, incompetence or misbehavior.
22.4 CONTRACTOR'S EQUIPMENT. All the Contractor's Equipment shall
be adequate for effective and safe execution of the Works and shall be subject
to periodic inspections by the Contractor. The Commission shall have the right
to verify at any moment the condition of the Contractor's Equipment. Any
Contractor's Equipment that turns out to be inadequate or hazardous shall be
removed and replaced or repaired by the Contractor expeditiously, without
causing delays to the development of the Works. All the Contractor's Equipment
when transferred to the Site must be used exclusively for execution of the
Works.
22.5 SPARE PARTS DELIVERY CONDITIONS. The Spare Parts, including
replacement of those used during the putting into service phase shall be
delivered in adequate conditions for their storage at the latest 30 Days before
the Date of Provisional Acceptance of the Unit involved to be delivered
according to the Execution Schedule. The delivery must be made at the storerooms
situated at the Site that the Commission will designate in writing to that
effect, which
132
designation shall be made in proper time to allow the Contractor to make the
necessary arrangements for transportation of the Spare Parts. All the delivery
expenses shall be at the Contractor's expense.
22.6 ACCEPTANCE. Within the two (2) Days following the Day on which
the Spare Parts are delivered at the place or places that the Commission
designated to the Contractor for their delivery, the Commission shall start
their inspection, being entitled to reject those that should not be delivered or
those that do not fulfill the respective technical specifications or the
covenant in Clause 22.7. The inspection may not take more than five (5) Days
computed from its start. The inspection having been completed, the Commission
shall draw up an inventory of the Spare Parts accepted by it, and on basis
thereof shall require the Contractor to deliver within a term of thirty (30)
Days to the Commission those Spare Parts that had not been supplied to the
Commission and that the Commission had requested of it, and to replace those
Spare Parts that did not satisfy the respective technical specifications or the
covenant in Clause 22.7. In case of default by the Contractor to supply to the
Commission the Spare Parts to the Commission according to this Clause 22.6, the
Commission shall charge the Contractor for each Week of
133
delay from the expiration of the said term of thirty (30) Days, the amounts
stipulated in Section 8 of the Bidding Bases, the Contractor being obligated to
pay them. Any dispute regarding the inventory drawn up by the Commission shall
be resolved according to Clause 31.2. In the event that the Commission does not
start of finish the inspection to which this Clause refers within the terms
established here, for causes imputable to it, the total of the Spare Parts
listed in the notice from the Commission shall be deemed as received by the
Commission.
22.7 QUALITY OF THE SPARE PARTS. The Spare Parts shall be new, and
be in good condition at the time of delivery, and shall comply with the
specifications established in Annex 2.
CLAUSE 23.
INDEMNITY
The Contractor shall indemnify and hold harmless the Commission and its
employees, counselors, agents, successors and assignees (and said obligation
shall remain in force even after the termination of the present Contract)
against any and all actions, complaints, suits, claims, losses, costs, damages,
trials, proceedings, taxes or expenses, including reasonable and documented
lawyer's fees and judicial costs,
134
that may arise or be related to any of the following presumptions:
135
(a) any damage or injury to any Person (including without
limitation the Commission) or to any property (excepting the Works) that may
arise as result of execution of the Works, including, by way of enunciation but
not of limitation, those derived from Faults in the Works, with the
understanding that the Contractor's liability according to this item (a) shall
be, except for grave negligence or deceitful behavior, limited to the amounts of
the insurance that the Contractor must maintain according to Clause 24.2;
(b) any injury (other than that which may be imputable to the
Commission, to its agents or employees), undergone by the employees, agents,
guests or licensees of the Contractor or of any Subcontractor or Supplier, in
the understanding that the liability of the Contractor according to this item
(b) shall be, except for gross negligence of deceitful behavior, limited to the
amounts of the insurance that the Contractor must maintain according to Clause
24.2;
(c) Any infringement of any patent, license, trademark or other
protected rights used in relation with the construction, ownership or operation
of the Power Plant or Units;
(d) any infringement of any provision of the Applicable Laws by
the Contractor or any Subcontractor, Supplier or Participant;
136
(e) Any claim by any employee of the Contractor or of any
Subcontractor or Supplier based on the Laws in labor or social security matters;
(f) any claim for damages to highways, roads, bridges or any other
transportation route or facilities, caused during the transportation of the
personnel and of Materials or Main Equipment to the Site; and
(g) any claim derived from unethical trade practices by the
Contractor or any Subcontractor or Supplier.
CLAUSE 24.
INSURANCE
137
24.1 INSURANCE AGAINST ALL RISKS.
(a) The Contractor shall make, at its own expense and before
starting the activities related with the Works, a risk study, which shall
indicate the probable and possible maximum losses for each of the risks to which
the assets are exposed and liabilities, during the period during which they are
under the Contractor's responsibility according to which is stated in the
present Contract. The results that arise from said studies shall serve as basis
for the preparation of each of the policies, as well as the amounts to be
established as insured sums.
(b) The Contractor shall obtain, at its own expense and before
starting the activities related with the Works, an integral insurance policy
against all risks, according to the results obtained in the risk study, covering
at least (i) risks of physical damages, including the risk of terrorism, caused
to the Works, to the Materials and to the Main Equipment, (ii) loss of profit
due to delay in the start of operation, (iii) risks derived from the assembly of
machinery (including during the Tests period), (iv) transportation risks of the
Materials and the Main Equipment to the Site, (v) risks derived from the
warranties mentioned in Clause 21 covering the damages that may be caused by
reason of, or
138
during the execution of the works, repairs or replacements that the Contractor
may carry out in fulfillment thereof, and (vi) risks derived from all the events
of Act of God or Force Majeure that constitute insurable risks. This policy
shall have characteristics equivalent to similar policies offered at
international level for this type of projects and shall be kept in full force
and effect by the Contractor until the Date of Completion of the Project, except
for the coverage required in sub-item (v) above, which must remain in full force
and effect until the end of the Warranty Period for the Station. All the
benefits collected by virtue of said insurance policy against all risks must be
used to rebuild or repair the Works.
(c) The minimum limit of liability contracted for under the
Contractor's integral insurance policy against all risks must be equal to the
highest possible loss obtained in the risks study.
(d) The minimum limit of liability contracted for by the
Contractor required in Clause 24.1 (c), shall be revised every two and a half
years by means of the update of the risks study made by order and at the expense
of the Contractor and, as the case may be, the contracted minimum limit of
liability shall be amended.
139
24.2 CIVIL LIABILITY INSURANCE.
(a) The Contractor shall obtain, at its sole expense and before
starting the activities related with the Works, one or more insurance policies
to cover the civil liability of the Contractor and of the Subcontractors and
Suppliers regarding damage, loss, consequential damage or injury to third
parties and/or to assets that are not part of the Works or of the Contractor's
Equipment, that may occur due to execution of the Works or to execution of the
warranties set forth in Clause 21. Additionally, the coverage shall take into
consideration the civil liability for pollution and for the damages that might
be caused to the environment. The respective policy or policies must specify
clearly that the Commission and its employees, as well as the employees of the
Contractor, of the Subcontractors and of the Suppliers, shall be deemed as third
parties regarding any activity by the Contractor or the Subcontractors and
Suppliers. Each of the respective insurance policies must have characteristics
equivalent to similar insurance policies offered at international level for this
type of projects, and must be kept in full force and effect by the Contractor
until the end of the Warranty Period of the Final Unit.
140
(b) The contracted limit of liability under the civil liability
policy shall be, at least, one hundred million Dollars (US $100'000,000.00). The
above-mentioned amount might be reduced, provided that the insured sum matches a
risk study made at the Contractor's expense, wherein the maximum possible loss
for civil liability is stated. The policies shall state the Commission as a
third party in case of damage or consequential damage.
(c) The minimum limit of liability contracted for by the
Contractor required in Clause 24.2(b), shall be revised every two and a half
years by means of the update of the risks study made by order and at the expense
of the Contractor and, as the case may be, the contracted minimum limit of
liability shall be amended.
24.3 WAIVER OF SUBROGATION. All the policies obtained and
maintained by the Contractor according to the present Contract shall include the
waiver of the insurers to all subrogation rights against the Commission and all
its assignees, affiliates, attorneys-in-fact, public servers, directors,
employees, insurers or issuers of policies for all the rights and claims of the
insurers to an indemnity, compensation or counterclaim, through an endorsement
or in
141
any other manner, related with any type of liability of any of the insured
persons to which this Clause 24.3 refers.
24.4 INSURED PARTIES. The term "insured party" shall be interpreted
in all the insurance policies required by this Clause 24 as in reference to the
Contractor. The Subcontractors and Suppliers may be included within the
Contractor's policy, if this last so states, otherwise, the Subcontractors and
Suppliers shall contract for independent policies as stated in Clause 24.10.
24.5 BENEFICIARIES. The Commission shall be named as preferential
beneficiary in all the insurance policies required in this Clause 24.
24.6 INSURERS. Each insurance policy must be issued by an insurance
company registered at the National Commission of Insurance and Bonds and that is
authorized to operate in the insurance branch or branches required according to
the present Contract. The insurance company must be reinsured with reinsurance
companies that comply with a classification for "A+" leaders and for the other
participants with a classification of at least "BBB" according to the standards
of the qualifying agency Standard & Poor's or their equivalent at the qualifying
agencies A.M. Best; Moody's; and
142
Duff and Phelps, and be registered at the National Commission of Insurance and
Bonds.
24.7 NOTICES. Each insurance policy shall require that the
Contractor notify the Commission in writing of (i) the execution of the
respective insurance contracts, within the thirty (30) Days following its
execution, (ii) the release of the validity of the policy or the performance of
changes to it, at least thirty (30) Days in advance, (iii) that it has paid the
respective premium for the insurances established in Clause 24, in the
understanding that together with the notice, the certified copies of the payment
vouchers shall be sent or a certified letter from the insurance company stating
that the policies are in force to all effects and that the respective premiums
are paid, and (iv) any other matter or problem that may affect the aforesaid
insurance policies in any manner.
The Contractor shall give immediate notice to the Commission of the
occurrence of any of the following facts: (i) any loss covered by any policy
required by this Clause 24, (ii) any dispute with an insurer, (iii) the
cancellation or premature termination of any policy, (iv) lack of payment of any
premium, (v) suspension of the validity, for any reason, of any policy required
in this Clause 24, and (vi)
143
any change to any coverage of the insurances contracted for by the Contractor.
24.8 CERTIFICATIONS. The Commission may verify at any time that the
Contractor maintains the insurances that it is required to maintain according to
the present Contract, and the Contractor, at request in this regard, must
provide adequate evidence to verify that said insurances are in full force,
including without limitation, the insurance policies, the receipts that evidence
payment of the premiums and the certified documentation regarding the terms and
coverages of the policies. Besides, within the thirty (30) Days following the
moment at which each policy required in this Clause 24 must be obtained, and on
each subsequent anniversary to such date, the Contractor shall provide to the
Commission a certificate issued by its insurers and reinsurers in which these
confirm the following: (a) the name of the insurance company that issued each
policy, (b) the scope, coverage, deductibles, exclusions, limit and day of
expiration of each policy, (c) that each policy is in full force and effect on
the date of certification, (d) that the Contractor has made all the respective
premium payments, and (e) that the Commission and all its assignees have been
named as preferential beneficiaries in each policy.
144
24.9 DURATION OF THE POLICIES. All the policies required by this
Clause 24 must be in force until the Date of Completion of the Project under the
terms of Clause 18.6 of the present Contract, and must be renewed at least each
year or whenever necessary. In the event that the Contractor does not obtain or
does not renew any policy at term, the Commission shall have the option to (a)
exercise the Performance Warranty in order to pay the renewal costs of said
policies on behalf of the Contractor, or (b) rescind the Contract by reason of
the Contractor's Event of Default described in Clause 26.1(g)having taken place.
24.10 PAYMENT CURRENCY. The premiums for all the insurance to be
maintained according to this Clause 24 shall be paid by the Contractor to the
insurers. The amounts of the premiums as well as the benefits to be collected
for the policies required in this Clause 24 shall be stated and payable in
Dollars, or at the exchange rate established by the Banco de Mexico, as of the
day on which the payment was actually paid, at the Commission's choice.
24.11 INSURANCES OF CONTRACTORS AND SUPPLIERS. The Contractor shall
make sure that all the Subcontractors and Suppliers, at all times during the
period in which they participate in the performance of works or provision of
145
services related with the Hydroelectric Development, provide and maintain in
full force and effect insurance policies equivalent to those established in
Clause 24.1 Civil Works in Construction Insurance and 24.2 Civil Liability
Insurance, according to the specific responsibilities for performance of the
works. Said policies shall cover the risks of physical damages to Materials and
Main Equipment, including catastrophic, as well as civil liability toward third
parties, including the Commission and the Subcontractors and Suppliers, as well
as their employees.
24.12 ADDITIONAL TERMS AND CONDITIONS. All the insurance policies
required by this Clause 24 must stipulate that they may not be amended
(including any reduction to the limits, to the effective coverage or increases
of deductibles) without prior written authorization by the Commission. Besides,
all the insurance policies must specify that they are primary and not additional
or in contribution to any other insurance.
24.13 CLAIMS. A representative of the Contractor must be present at
the Site during unloading of the Materials and Main Equipment and shall give
notice to the insurance company regarding any damage or loss thereof and shall
determine the remedies against said accidents. The Contractor shall have the
responsibility for presenting in timely manner and duly
146
founded and documented, any claim related with any of the insurances that it has
the obligation to obtain according to this Clause 24.
24.14 NO RELEASE FROM CONTRACT OBLIGATIONS. The fact that the
insurance policies called for by virtue of the present Contract were obtained
shall not be understood as a release, total or partial, of any of the
Contractor's obligations and responsibilities toward the Commission by virtue of
the Contract, nor shall it be understood to be considered that said policies are
adequate to indemnify the Commission against said risk. Therefore, the
Contractor shall have the responsibility to obtain, at its own expense,
additional policies or other policies that it may deem necessary or prudent for
its protection and that of the subject of the Contract, in addition to having to
obtain at its sole expense additional policies whenever the Commission, duly
founded and motivated, determines their applicability in commercially acceptable
terms.
24.15 GENERAL PROVISION. The risks, obligations and responsibilities
provided against the Contractor in this Contract, are independent of contracting
for the insurances to which this Clause refers and, consequently, the amount of
the obligations and responsibilities derived from the
147
assumption of such risks may not be reduced, in the measure of said insurances,
due to lack of contracting or sufficient coverage thereof or to lack of payment
to the insurers, in prejudice to the Commission or to third parties. The
Contractor, therefore, may negotiate at its own expense and risk the deductibles
it deems suitable in the policies required in this Clause 24, but at all times
it shall be obligated by the total coverage required.
CLAUSE 25.
TAXES
The Contractor shall assume and withhold or pay all the Taxes existing
or that might take force, caused by the Contractor or its employees related with
the execution of the performance of the Contract, including, without limitation,
the following:
(a) Taxes and Charges on wages and salaries and any other payment
made to the personnel and all the applicable contributions to social security
and labor charges; and
(b) Import Duties and Taxes that might be caused by the
importation of Materials or Main Equipment into Mexico. The Commission and the
Contractor accept to recognize to one another the increases or decreases in
import duties and taxes, corresponding to the assets stated in the Proposal as
148
of foreign origin, from the date of its presentation. Said recognition shall
apply when the variations actually occur and shall refer exclusively to the
direct cost derived from said increase or decrease and no additional charge may
be included therein for indirect or financing costs.
Variations in these items must be evidenced with (i) reasonable
documentation to the other party's satisfaction and (ii) an opinion issued by
the external auditors of the party that asserts said variation. The increase or
decrease shall be paid or discounted, as the case may be, from the Contract
Price or the Termination Value.
CLAUSE 26.
RESCISSION OF THE CONTRACT
26.1 EVENTS OF DEFAULT BY THE CONTRACTOR. The occurrence of any of
the cases described as follows before the Date of Completion of the Project,
unless it arises from the occurrence of an Act of God or Force Majeure or of an
Event of Default by the Commission, shall constitute an Event of Default by the
Contractor:
(a) if the Contractor ceases or abandons the development or
construction of the Station for a period of more than thirty (30) Days, unless
it is due to an order or instruction given by the Commission;
149
(b) if the Contractor defaults on the obligation stipulated in
Clause 12 on the grant and maintenance of the Performance Warranty and the
Quality Warranty for the amounts and in the terms established in Clause 12;
(c) if the Contractor does not attain any Critical Event within a
term of ninety (90) Days computed from the respective Date of Critical Event;
150
(d) if at any time, the Contractor is declared in mercantile
bankruptcy or in state of insolvency or requests or accepts the appointment of a
controller, receiver or trustee, or should any of these be appointed or take
possession of the Contractor or of the whole or a substantial part of its
liabilities and assets; if the Contractor or the total or a substantial part of
its properties, assets or income become subject to a mercantile bankruptcy
proceeding, payments suspension, dissolution or liquidation; or if the
Contractor makes or executes a general assignment or an agreement in benefit of
its creditors or threatens in writing to suspend its operations or any
substantial part thereof; or should take any action or any event should occur
that, by virtue of the Law applicable to the Contractor, should have a
substantially similar effect to any of the above presumptions;
(e) if at any time a change arises in the corporate capital
stock's structure or in the corporate control of the Contractor that was
constituted as a corporation with a specific purpose in terms of the Bidding
Bases, without prior and written consent from the Commission (which shall not be
refused without just cause); or if the company mentioned in the Technical
Proposal as that which satisfies the requisites of experience according to the
Bidding Bases ceases to act as
151
the Project's global administrator behalf of the Contractor and to have the
capacity to obligate the Contractor in its dealings with the Commission;
(f) if any declaration or warranty made by the Contractor in
Clause 3.2: (i) turns out to be false or inaccurate in any substantial aspect on
the date of signature of the present Contract, (ii) if it is capable of being
remedied and continues to be false or inaccurate for a period of thirty (30)
consecutive Days from the notice given by the Commission to the Contractor
thereon, and (iii) at the time that it is proven to have been false or
inaccurate it is significantly harmful to the interests of the Commission under
the present Contract;
(g) if the Contractor does not obtain or does not maintain in
force the insurance coverages to which it is obligated under Clause 24;
(h) if the Contractor does not abide by the determination of the
Independent Expert according to the stipulations of Clause 31.2;
(i) if the Contractor refuses to enter into the agreement for
additional works according to Clause 9.3;
(j) if the Contractor does not obtain any Permit under its care
from any Government Authority within the ninety (90) Days following that on
which it had the obligation to obtain
152
said Permit, if said situation causes a significant delay in the progress of the
Works;
(k) if the Contractor does not execute the Works according to the
stipulations of this Contract or without just cause fails to abide by the orders
given by the Supervision Resident or by the Specific Work Supervision Residents;
(l) if the Contractor, for causes imputable to it, does not start
the works subject matter of the Contract within the 15 Days following the agreed
date without just cause, according to the Law of Public Works and Services
Related with Them and its Regulations;
(m) if the Contractor does not provide to the Commission and to
the agencies that are empowered to intervene, the necessary facilities and data
for inspection, monitoring and supervision of the Materials and tasks used and
executed at the Works;
(n) if it subcontracts parts of the Works subject matter of the
Contract, without having the Commission's written organization;
(o) if the Contractor assigns the collection rights derived from
the Contract, without having written authorization from the Commission, without
prejudice to the provisions of Clause 30.1 of this Contract; or
153
(p) if the Contractor defaults on another substantial obligation
under the present Contract, and said default continues for a period of 30 Days
computed from reception of the notice given by the Commission to the Contractor
regarding said default.
26.2 EVENTS OF DEFAULT BY THE COMMISSION. The occurrence of any of
the cases described as follows before the Date of Completion of the Project,
unless it results from the occurrence of an Act of God or Force Majeure or of an
Event of Default by the Contractor, shall constitute an Event of Default by the
Commission:
(a) if any declaration or warranty made by the Commission in
Clause 3.1: (i) turns out to be false or inaccurate in any substantial aspect on
the date of signature of the present Contract, (ii) if being capable of being
remedied, it continues to be false or inaccurate for a period of thirty (30)
Days from the notice given by the Contractor to the Commission on the subject,
and (iii) at the moment in which it proves to have been false or inaccurate, it
is significantly harmful to the interest of the Contractor under the present
Contract;
(b) if the Commission defaults on its obligation to pay to the
Contractor any part of the Contract Price and this
154
default is not corrected within a term of five (5) Banking Days computed from a
written communication by the Contractor having been delivered to the Commission
regarding said default;
(c) if the Commission is declared in mercantile bankruptcy or in
state of insolvency or if it requests or accepts the imposition of a controller,
receiver or trustee, or should any of these be appointed or take possession of
the Commission or of the total or a substantial part of its liabilities and
assets; if the Commission or the total or a substantial part of its properties,
assets or income become subject to a mercantile bankruptcy proceeding, payments
suspension, dissolution or liquidation; or if the Commission makes or executes a
general assignment or an agreement in benefit of its creditors or threatens in
writing to suspend its operations or any substantial part thereof, unless (i)
the above is for the purpose of submitting to a merger or consolidation and said
merger or consideration actually takes place, in which case the provisions of
Clause 26.2(d) shall apply, and (ii) in the case of insolvency, suspension of
payment, mercantile bankruptcy, liquidation or dissolution, the Federal
Government or an SNC (national credit corporation) assumes or guarantees
formally and in writing
155
all the obligations of the Commission under the present Contract;
(d) if the Commission consolidates or merges with another Person
or undergoes a split or fails to perform all or a substantial part of its
current activities or, directly or indirectly (voluntarily or involuntarily)
sells or transfers in a single transaction or in a number of them, a significant
part of its assets, unless the following conditions are fulfilled:
(i) that the Federal Government or any SNC assumes or guarantees,
in writing, all the obligations of the Commission by virtue of the present
Contract;
(ii) that in the event that the Commission retains its obligations
by virtue of the present Contract, (x) the Commission continues to be a
decentralized public organism, owned or controlled by the Federal Government and
(y) at the time of said operation and after it takes place, the capacity of the
Commission to comply with its obligations established in the present Contract
are not affected substantially;
(iii) that in case the surviving entity, the split entity, the
entity that results from the consolidation or merger or the entity to which a
substantial part of the assets of the Commission is sold, assigned or leased (as
the case may be) is the entity that acquires the rights and
156
obligations of the Commission by virtue of the present Contract, (x) such entity
is an entity organized and existing under the laws of Mexico and is a
decentralized public organism, fully owned by the Federal Government or an
entity controlled by the Federal Government, (y) such entity assumes, formally
and in writing, each and every one of the rights and obligations of the
Commission by virtue of this Contract and (z) (A) at the time of such operation
and after having put it into effect, the financial situation of such entity is
sufficiently sound as to foresee reasonably that it will be able to fulfill the
obligations of the Commission according to this Contract, or (B) the Commission
(provided that it continues to be a decentralized public organism fully owned or
controlled by the Federal Government, and its capacity to fulfill the
obligations against it established in the present Contract is not substantially
affected) guarantees, formally and in writing, all the obligations of said
entity by virtue of the present Contract;
(iv) that in case that the Commission is split or reorganized in
two or more entities, (x) each of said entities shall be an entity organized and
existing under the laws of Mexico and is a decentralized public organism fully
owned by the Federal Government or an entity controlled by the Federal
Government, (y) each of said entities assumes or
157
guarantees jointly and in writing, all the obligations of the Commission by
virtue of the present Contract, and (z) each of said entities and each of the
parties executes amendments or supplements to the present Contract that are
reasonably required by the Contractor, to reflect said division or
reorganization of the Commission, and/or said assumption or warranty; and
(v) that immediately after performing said operation, no Event of
Default by the Commission takes place or continues, with the understanding that
any obligation that continues to be an obligation of the Commission or of
another entity as result of such operation shall be considered as if the
Commission or said entity, as the case may be, had contracted it at the time of
such operation;
(e) if the Commission ceases to be a decentralized public organism
owned or controlled by the Federal Government, unless such cessation is related
with an operation allowed under Clause 26.2(d)(iii) and the conditions
contemplated therein are complied with; or if the Congress of Mexico or any
other Government Authority executes any action or procedure for liquidation or
suspension of operations of the Commission, unless in this case the Federal
Government or any SNC assumes or guarantees in writing the obligations of the
Commission by virtue of this Contract;
158
(f) if the Commission does not abide by the determination of the
Independent Expert according to the provisions of Clause 31.2; or
(g) if the Commission defaults on any other substantial obligation
under the present Contract, and said default continues for a period of thirty
(30) Days computed from reception of the notice given by the Contractor to the
Commission regarding such default; with the understanding that the Event of
Default by the Commission does not include the delay in obtaining the Permits to
be obtained by the Commission according to Annex 9, which event shall be subject
to Clause 26.5.
26.3 NOTICE OF POTENTIAL EVENTS OF DEFAULT. The Contractor as well
as the Commission shall give notice to the other party, as soon as possible,
from the time of having knowledge of an Event of Default or an event that might,
unless for lack of notice or lack of expiration of a certain term, or both,
constitute an Event of Default. Said notice shall describe in detail the
circumstances of the subject event and specify the actions that the party that
gives the notice will take to remedy said event.
26.4 RIGHT OF RESCISSION.
159
(a) If an Event of Default by the Contractor takes place, the
Commission shall have the right to rescind the present Contract administratively
according to articles 61, 62 y 63 and others related from the Law of Public
Works and Services Related with Them and its Regulations, through delivery to
the Contractor of a notice of said rescission and exhausting the procedure
established therein.
The Commission may rescind administrative at any time this Contract for
causes imputable to the Contractor, in which case the Commission shall so advise
the Contractor in timely manner.
When the Commission determines the rescind the Contract, said
rescission shall be fully legal and without need for a judicial resolution,
sufficing for this that the procedure stated in the following paragraph is
complied with.
When the Contractor incurs into an Event of Default by the Contractor
in terms of Clause 26.1 of the present Contract, the Commission may rescind the
Contract by informing the Contractor of it in verifiable form and in writing, so
that this last, within the term of 15 (fifteen) business days computed from the
date on which it receives the notice of rescission, may state what may be
suitable to its right, in which case the Commission shall resolve as proper
within the term of 15 (fifteen) business days following the
160
date on which it received the answering letter of the Contractor, that is, that
it may demand of it the fulfillment of the Contract and payment of the penalties
agreed therein, as the case may be; or else, to give it notice in verifiable
manner of its decision to rescind the Contract administratively.
In the cases of rescission provided for in this clause, the Commission
and the Contractor agree that the first named will proceed to execute the
warranties and will abstain from paying the amounts resulting from performed
works not yet paid, until the respective release is granted, which must be done
within the 30 (thirty) Days following the date of notice of the rescission,
which release shall provide for the over cost of works yet not performed, as
well as what regards the recovery of the Materials and Equipment that, as the
case may be, were turned over to the Contractor.
(b) If an Event of Default by the Commission takes place and the
Contractor wishes to rescind the Contract entirely, it shall remedy to the
arbitration procedure to obtain the respective resolution, as provided for in
Clause 31.3.
(c) In case of any rescission of this Contract according to Clause
26.4(a) the Commission shall pay to the Contractor the applicable Termination
Value on the date that
161
takes place 30 (thirty) Days after the date of notice of the rescission. In case
of any rescission of this Contract according to Clause 26.4(b), the Commission
shall pay to the Contractor the applicable Termination Value on the date that
takes place 30 (thirty) Days after the date of notice of the arbitration award,
without prejudice to abiding, in any case, to the provisions of said award. Once
the start of the rescission procedure is informed by the Commission, this last
will take immediate possession of the Works to take them over and a detailed
minute shall be drawn up, with or without appearance by the Contractor, of the
status held by the works in the presence of a attesting official. The Contractor
shall have the obligation to return to the Commission, within a term of ten
calendar days, computed from the start of the respective procedure, all the
documentation that this last may have provided to it for performance of the
works. Ownership and the risk of loss of the Works shall be transferred to the
Commission, once it has paid to the Contractor the Termination Value, with the
understanding that the Contractor shall take all steps and execute all necessary
actions to transfer the Works to the Commission free of encumbrances and without
limitation of domain.
In all the cases mentioned in this Clause the terms of articles 61, 62
and 63 of the Law of Public Works and
162
Services Related with Them and articles 124 through 139 of its Regulations shall
apply.
26.5 TERMINATION IN CASE OF DELAY IN THE SCHEDULED DATE OF
COMPLETION OF THE PROJECT. In the event that the originally agreed upon
Scheduled Date of Completion of the Project is delayed for a period of sixty
(60) Days (either consecutive or cumulative) due to Governmental Force Majeure
or to the presumptions contemplated in Clause 13.3(b), the present Contract
shall be terminated automatically regarding the affected Work on the date that
takes place thirty (30) Days after expiration of said period of sixty (60) Days,
unless within said period of thirty (30) Days the parties come to an agreement
in writing on terms and conditions that will compensate the Contractor
reasonably for the expenses related directly with the Works, reasonable and
documented in which the Contractor may incur (which shall include the service of
the Contractor's Debt related with the Financial Agreements and any similar
financing provided by any of the Participants or any of their Affiliates) as
result of any delay additional to the sixty (60) Days caused by the reasons
stated in this Clause. Should the present Contract be terminated according to
this Clause 26.5, the Commission
163
shall pay to the Contractor the applicable Termination Value within the 30 Days
following the date of termination.
26.6 NON-INTERRUPTION OF CONSTRUCTION DURING THE SANITATION
PERIODS. In the case that an event takes place of those to which Clause 26.2
refers, the Contractor shall continue with the construction of the Works until
the sanitation period has expired under the terms and conditions of the present
Contract.
CLAUSE 27.
ACT OF GOD OR FORCE MAJEURE AND SUSPENSIONS
27.1 RELEASE OF LIABILITY. Except as expressly provided in the
present Contract, neither party shall be liable for damages, claims or demands
of any nature derived from delays or defaults on their obligations by virtue of
the present Contract when said delay or default is imputable to Act of God or
Force Majeure; with the understanding that the party that invokes Act of God or
Force Majeure must have given two written notices to the other party (i) the
first, within the seven (7) Days following the date on which the invoking party
becomes aware or should have become aware of the occurrence of said event,
specifying the details and the approximate time of duration thereof and (ii) the
second, once said party ceases to be prevented from performing its obligations
under
164
the present Contract as result of an Act of God or Force Majeure.
27.2 BURDEN OF PROOF. In the event that a party does not acknowledge
the occurrence of an Act of God or Force Majeure, the party that claims said
occurrence shall have the burden of proof. In case of strikes or other labor
disturbances, the party that adduces that said strike or labor disturbance is
due to default on a labor contract by the affected party shall have the burden
of proof.
27.3 SPECIFIC ACT OF GOD OR FORCE MAJEURE. Exclusively, when an Act of
God or Force Majeure takes place, existing of hydro meteorological events
(excessive generalized rain or generalized anticipation of rain) that have as
consequence that the Contractor (i) cannot divert the river before November 30,
2003 or (ii) cannot make the Final Closing before July 1st, 2006, and that take
place curing the thirty Days preceding the dates mentioned in items (i) and (ii)
above, the Contractor, besides complying with the obligations provided in
clauses 27.1 and 27.2, must agree with the Commission which are the affected
Works and the measures to secure them, as well as the actions that the
Contractor must consider as regards its personnel, machinery and construction
equipment related with the affected Works and the adjustments
165
that, tentatively, will have to be made to the Execution Schedule, once the Act
of God or Force Majeure comes to an end, drawing up to that effect a minute that
shall be signed by both parties.
The Dates of affected Critical Events shall be extended in equal
proportion to the period that comprises the Act of God or of Force Majeure
describe above and its effects, without this signifying to amend the originally
agreed Execution Term. The formalization of said extension shall be made through
an agreement.
Once the works are resumed, the Contractor may request, only, the
payment of: (i) rehabilitation or replacement of the damaged or destroyed Works,
in case these exist; (ii) the non recoverable expenses that are generated during
the suspension of the affected Works, limited to the payroll or watchmen and
conservation and vigilance personnel of the affected Works, assigned during the
suspension, the costs of work management as to fees, wages and fringe benefits
of the strictly necessary technical and management personnel and who have a
specific function during the suspension; the strictly necessary labor and that
has a specific function during the suspension and who has not been transferred
to another work front; and (iii) the reasonable, documented and directly related
with the affected Works financial expenses during the
166
period of the suspension, in terms of the provisions of article 119 of the
Regulations to the Law of Public Works and Services Related to Them. The
respective payments shall be agreed upon in an agreement entered into subject to
article 59 of the Law of Public Works and Services Related with Them.
27.4 RIGHT OF TERMINATION BY ACT OF GOD OR FORCE MAJEURE. When by an
Act of God or Force Majeure, except as provided in Clause 27.3 and 27.5,
continuation of the works becomes impossible for a period that delays the
Scheduled Date of Completion of the Project by more than 180 consecutive Days or
270 cumulative Days, the Contractor may choose not to execute them. In this
instance, if the option is for early termination of the Contract, it shall so
request the Commission, which will determine as applicable within the fifteen
Days following presentation of the respective document, which determination it
may not refuse without just cause, but if the Commission does not answer within
said term, the Contractor's request shall be deemed as accepted. In case of
refusal, it shall be necessary for the Contractor to obtain the respective
declaration according to the procedure provided in Clause 31.3. In the event
that the present Contract is terminated according to this Clause 27.4,
167
the Commission shall pay to the Contractor the applicable Termination Value.
ACT OF GOD OR OF FORCE MAJEURE BECAUSE OF VARIATIONS IN FINANCIAL
COSTS. Notwithstanding the express provisions of this Contract, if during
fifteen (15) consecutive days within the last thirty (30) days of the term
between the date when the Bid was presented and day 18 after such date, the
Current Margin is above or below the Original Margin by more than 150 basic
points, both Contractor and Commission will be entitled to argue that an act of
God or of force majeure has occurred, and the corresponding notice must be
issued to the other Party within the first seven (7) days after such event
occurs, and consequently, the Contract may be terminated free of any
responsibility whatsoever for the Parties and without the periods referred to in
clause 27.4 having to pass. The Party requesting termination of the Contract
according to this Clause 27.5 must present to the other party the documents
grounds of the request for termination within the first fifteen (15) days after
the request for termination is received, in order that within the first fifteen
(15) days after such date the latter may manifest its written acceptance or
rejection; if an answer is not received within aforementioned term, the request
will be considered accepted
168
and Commission will proceed to pay the applicable Termination Value according to
the provisions of the Contract (in the understanding that such Termination Value
will only consider physical advance of Work in the Site). Any dispute between
the Parties as to whether the act of God or of force majeure referred to in this
Clause 27.5 is justifiable, this will be resolved by the Independent Expert
according to Clause 31.2.
All provisions of this Clause will be subject to Contractor proving, to
the satisfaction of Commission, that on the date when the act of God or of force
majeure is declared to have occurred due to Variations in the Financial Costs,
it has not been possible to close or establish conditions to finance the
project.
CLAUSE 28.
LIABILITY LIMIT
Notwithstanding any provision to the contrary contained in the present
Contract, neither party shall be liable for indirect or consequential losses or
damages of any type that are derived from or in any manner related with the
performance or default on the obligations of the present Contract, according to
Applicable Laws.
169
The parties recognize that contractual responsibility of each, in terms
of the present Contract, can not exceed the total Contract Amount.
CLAUSE 29.
CONFIDENTIALITY
29.1 INFORMATION FROM THE COMMISSION. The Contractor agrees that all
the information that the Commission may provide to it in relation with the
present Contract, including, technical, commercial and of other nature
information, and that which had been provided to it by or on behalf of the
Commission in relation to the Project, as well as all the information developed
by the Contractor that reflects said information, shall be the Commission's
exclusive property. The Contractor agrees not to use said information for any
other purpose that is not that of fulfilling its obligations according to the
present Contract, to maintain and handle said information as confidential
property of the Commission, and to abstain from disclosing said information to
any third party without prior and written consent by the Commission.
Notwithstanding the above, the provisions of this Clause 29.1 shall not apply
to: (i) information in the public domain that has not been made public through
default on the present Contract; (ii)
170
information in possession of the Contractor that was obtained or developed
before its disclosure by the Commission without violating an obligation of
confidentiality; (iii) information obtained from third parties who are entitled
to disclose it without violating an obligation of confidentiality; and (iv)
information that must be disclosed due to requirement of Laws or by requirement
of Government Authorities, provided that said disclosure is mandatory for the
Contractor and that the fact of not disclosing it would make the Contractor
liable to civil, administrative or criminal liabilities and, furthermore, that
the Contractor promptly gives prior notice to the Commission of the request for
said disclosure.
29.2 DISCLOSURE OF INFORMATION. Notwithstanding the provisions of
Clause 29.1, the Contractor shall be entitled to disclose to its creditors and
stockholders, to the Subcontractors or to the Suppliers the reasonably necessary
information for follow-up on their obligations according to the present
Contract; provided that the respective creditor, stockholder, Subcontractor or
Supplier has entered into a confidentiality contract with the Contractor, with
prior authorization by the Commission, satisfactory in form and content and in
benefit of the Commission, and that the Contractor diligently enforces each of
said confidentiality
171
agreements and informs the Commission in timely manner of any infringement
thereof.
CLAUSE 30.
ASSIGNMENT OF THE CONTRACT; SUBCONTRACTS
30.1 ASSIGNMENT. The Contractor may not assign any of its rights or
obligations under the present Contract, except for the collection rights. The
Commission hereby grants its consent to the Contractor to enable this last to
assign said collection rights to the Creditors, with the understanding that the
Contractor shall advise the Commission in writing that it has performed said
assignment. The Commission may assign or transfer freely the whole or part of
its rights and obligations according to the present Contract to any Person,
provided that the Commission guarantees to the Contractor the fulfillment of all
the obligations thus transferred.
30.2 SUBCONTRACTING. The Contractor may enter into subcontracts for the
execution of any part of the Civil Works, Associated Works or Electromechanical
Works; with the understanding that the Contractor shall, unless subcontracts
with some Participant are involved, first give notice to the Commission of said
intention at least twenty (20) Days before the date on which the subcontract
takes effect. Said notice shall include the name of the possible Subcontractor,
the
172
part of the Works to be subcontracted and all the information that the
Commission requires to evaluate the technical and financial capacity of the
possible subcontractor to perform the Works subject matter of the subcontract
involved, including without limitation its standard industrial program and its
quality assurance system. In the event that the Commission has bases to object
to the subcontract, it shall inform the Contractor of its reasons in writing
within the fifteen (15) Days following the Day on which the Commission received
said notice from the Contractor, with the consequence that the Contractor shall
not enter into the subcontract. If the Commission should not inform the
Contractor of any objection within the applicable period to which this Clause
refers, the Contractor shall be entitled to enter into the subcontract. The
Commission may not refuse to grant its consent for any subcontract without just
cause.
30.3 LABOR OBLIGATIONS. The Contractor and each of the Subcontractors
shall have the character of employer of the personnel hired by each of them in
relation with the Works. In no way shall any of said employees considered as an
employee of the Commission.
30.4 NO RELEASE OF LIABILITY. Notwithstanding the consent granted by
the Commission for a Subcontractor, the
173
Contractor shall be and shall continue to be at all times sole responsible for
the quality and the appropriate and timely execution of the Works according to
the Contract, as if said subcontracting had not taken place and shall make sure
that each Subcontractor complies with all the terms and conditions of the
present Contract. The consent by the Commission regarding a Subcontractor shall
not release nor exempt the Contractor from any liability or obligation according
to the Contract. The Contractor shall be fully responsible for the actions,
faults, omissions and negligence of each and every one of the Subcontractors,
their agents, workers and personnel, and shall keep the Commission free of any
loss or expense that might be caused in this regard and shall hold it harmless
against any dispute. Except for the provisions of Clause 21.7, nothing in the
Contract will create a direct relationship between the Commission and any
Subcontractor or Supplier.
CLAUSE 31.
APPLICABLE LAW AND SOLUTION OF DISPUTES
31.1 APPLICABLE LAW. The present Contract shall be governed and
interpreted according to the Law of Public Works
174
and Services Related with Them and its Regulations and the other Federal Laws of
Mexico.
31.2 INDEPENDENT EXPERT. The parties shall make an effort to solve
their differences by common agreement in exclusively technical matter related
with this Contract. In the event that the parties do not reach an agreement
regarding said matter, they shall submit such dispute to an Independent Expert.
The party that decides to submit the matter to the decision of an Independent
Expert (the "Plaintiff Party") shall give notice to the other party (the
"Defendant Party"), proposing three candidates from the list that is included in
Annex 8 for the Defendant Party to select the Independent Expert from among
these candidates within the fifteen (15) Days following its reception of said
notice, with the understanding that in the event that the Defendant Party does
not select the Independent Expert within the established term, the Plaintiff
Party may appoint the Independent Expert from among the three candidates
contained in the notice and shall advise the Defendant Party of said
designation. Each party shall pay its own costs related with this procedure and
the services of the Independent Expert shall be covered by the Commission and by
the Contractor in equal parts. Within the thirty (30) Days following the notice
175
that a dispute has been turned over to review by the Independent Expert, each
party shall provide to this last the information it possesses as regards the
matter under controversy. The Independent Expert may arrange one or several
meetings with the parties (jointly) in order to establish the specific points
under dispute and may require the supplementary information that may be
necessary. The Independent Expert shall issue his decision within thirty (30)
Days from the date on which it was given notice that it was selected, unless the
parties agree otherwise. The Independent Expert's decision shall be final and
mandatory for the parties, except in the case of irregularities in the
designation of the Independent Expert, fraud, bad faith or evident error,
provided that it refers only and exclusively to the expertise question that was
stated to the Independent Expert. The parties shall update occasionally the list
included in Annex 8 in order to make sure that there is at all times a
sufficient number of qualified experts in each category of disputes covered by
this Clause 31.2, with the understanding that neither of the parties may
nominate an expert that in any way depends or is linked to said party.
31.3 ARBITRATION. All the disagreements that may arise in relation with
the present Contract, other than the
176
technical disagreement that will be resolved according to Clause 31.2, shall be
resolved exclusively according to the Arbitration Regulations of the
International Chamber of Commerce by three arbitrators, one chosen by each of
the parties and the third, who shall be chairman of the court, elected by
agreement between the two arbitrators chosen by the parties. In the event that
the two arbitrators should not agree on the election of the third arbitrator
within the thirty (30) Days following the date of confirmation of the second
arbitrator by the International Chamber of Commerce, the chairman shall be
elected according to said Regulations. The site of the arbitration shall be the
City of Mexico, D.F. The arbitration shall be held in the Spanish language. The
Law applicable to the matter of the arbitration, and supplementary to the
procedure in whatever is omitted in the Arbitration Regulations of the
International Chamber of Commerce, shall be the one stipulated in Clause 31.1.
The arbitration award shall be final and mandatory for the parties. Any court
with jurisdiction over the award or with jurisdiction over the parties or their
assets may issue a sentence regarding the award. The arbitration court is
understood to have to accept as mandatory the determinations, if any, of the
Independent Expert regarding technical aspects within his competence, unless
there had been irregularities,
177
in his designation, evident error, fraud or bad faith, but the arbitration court
shall maintain jurisdiction to determine whether the Independent Expert acted
within the scope of his competence or whether there is evident error, fraud or
bad faith in his determinations.
31.4 WAIVER OF IMMUNITY. In the measure that the applicable law so
allows, each of the parties hereby waives expressly and irrevocably any right of
immunity that any of them or its assets may have or acquire in the future
(whether it is characterized as sovereign immunity or otherwise) regarding any
arbitration procedure instituted according to Clause 31.3 or any legal procedure
filed to execute any arbitration award that may result from any arbitration
procedure instituted according to Clause 31.3, either in Mexico or in any
foreign jurisdiction, including, without limitation, immunity against summons,
immunity of jurisdiction or against the sentence of any court or tribunal,
immunity against order of execution of sentence, and immunity against preventive
attachment over any of its assets; with the understanding that according to the
provisions of Article 4 of the Federal Code of Civil Procedures, a Mexican
tribunal cannot order a preventive attachment, an attachment in assistance of
execution of a
178
sentence, or an execution order against any of the properties or assets of the
Commission.
31.5 CONTINUATION OF THE WORKS DURING LEGAL PROCEDURES. Except as
provided otherwise in this Contract or instructions by the Commission, the
Contractor shall continue with the Works and comply with its obligations
according to this Contract, even if any proceedings had been started according
to Clauses 31.2 or 31.3.
CLAUSE 32.
GENERAL PROVISIONS
32.1 NO WAIVER; ACCUMULATION OF REMEDIES. Except as specifically
stipulated in the present Contract: (i) no failure or delay by either of the
parties in exercising any of its rights, faculties or remedies according to the
present Contract, nor the commercial behavior that the parties might observe,
shall be interpreted as a waiver by either of the parties to any right, faculty
or remedy, and no individual or partial exercise of any right, faculty or remedy
shall preclude any other later exercise of the same or of any other right,
faculty or remedy; (ii) All the rights, faculties and remedies according to the
present Contract shall be cumulative and shall not exclude any other right,
faculty or remedy available by law; and (iii) no notice or request made
179
to either of the parties shall entitle said party to receive any other or later
notice or request in similar or different circumstances, nor shall it constitute
a waiver by either of the parties to the right to take any additional or
different action in any of said circumstances without any notice or request.
32.2 ENTIRE OF THE CONTRACT. The present Contract is the complete and
exclusive compilation of all the terms and conditions that govern the agreement
of the parties as related to its subject matter. No statement by any agent,
employee or representative of the Contractor or of the Commission made before
entering into the present Contract, shall be admitted in the interpretation of
its terms, except for the formal answers in writing given by the Commission to
the bidders in the series of questions and comments made according to the
Bidding Bases, with the understanding that, in the event of a conflict between
two of said answers, the last in time shall prevail and, in case of conflicts
between an answer and the terms of the Contract, the terms of the Contract shall
prevail.
32.3 NOTICES. Except as provided otherwise in the present Contract, all
notices and other communications between the parties issued according to this
Contract, shall
180
be done in writing and shall take effect at the time of their reception by the
addressee at the address listed below, if the date of said reception is a
Working Day at the place at which it is received, otherwise on the following
Working Day, or at such other as the party may have advised in writing to the
other party:
If to the Commission:
Avenida Paseo de la Reforma No. 164, Mezanine 2
Colonia Juarez, Delegacion Cuauhtemoc,
Codigo Postal 06600, Mexico, D.F.
ATT'N : C. Subdirector de Contratacion de Proyectos de Inversion Financiada,
Phone: 5705 2992 y/o 5229 4400 Ext. 3210 y 3211
Fax: 5229 4755 y/o 5229 4400 Ext. 3244
If to the Contractor:
Mineria No. 145, Edificio G, 2(degree)Piso,
Colonia Escandon,
Codigo Postal 11800, Mexico, D.F.
ATT'N: C. Representante Legal
Phone: 52-72-99-91 Ext. 2390 y 2391
Fax: 52-72-99-91 Ext. 2379
32.4 SEVERABILITY OF THE PROVISIONS. The nullity, illegality or
unenforceability of any of the provisions of this Contract shall not affect in
any way the validity or enforceability of the other provisions of same.
32.5 AMENDMENTS AND WAIVERS. Any amendment or clarification to the
present Contract shall be made by means of a prior agreement in writing duly
signed by each party to
181
this Contract according to the provisions of article 59 of the Law of Public
Works and Services Related with Them and in the Third Chapter, Section III of
the Regulations to the Law of Public Works and Services Related with Them, in
whatever may be applicable. The waiver to any stipulation in the Contract by any
party shall be done in writing, duly signed by such party, making express
reference to the right that said party waives, as well as to the Clause of the
present Contract in which said right is stated.
32.6 LANGUAGE. The language of the present Contract is Spanish. All the
documents, notices, waivers and other communications between the parties as
related with the present Contract shall be in Spanish.
IN TESTIMONY WHEREOF, the parties enter and give, by means of their
dully authorized signers, the present Contract, in six copies, equally valid, in
Mexico City, Distrito Federal, March 25, 2003.
FOR THE "COMMISSION" FOR THE "CONTRACTOR"
EUGENIO LARIS ALANIS JORGE BERNARDO AGUIRRE QUINTANA