Exhibit 10.1
[(CONFIDENTIAL TREATMENT OF CERTAIN DESIGNATED PORTIONS OF THIS AGREEMENT HAVE
BEEN REQUESTED BY REGISTRANT. SUCH CONFIDENTIAL PORTIONS HAVE BEEN OMITTED, AS
INDICATED BY AN (*) IN THE TEXT, AND SUBMITTED TO THE COMMISSION).]
CONTRACT AND ALL EXHIBITS
HEREIN
BETWEEN
RIVERSIDE CEMENT COMPANY AND ORO GRANDE CONTRACTORS
THIS CONTRACT made the 27th day of September, 2005, by and between Oro
Grande Contractors, a Joint Venture between Zachry Construction Corporation and
AMEC E&C Services, Inc. with its principal office at 527 Logwood, San Antonio,
Texas 78221, hereinafter called "CONTRACTOR", and Riverside Cement Company, a
California general partnership with its principal office at 1341 W. Mockingbird
Lane, Dallas, Texas 75247, hereinafter called "OWNER":
WITNESSETH, that CONTRACTOR and OWNER, for the consideration hereinafter
named, agree as follows:
ARTICLE 1. SCOPE OF THE WORK
1.1 OWNER hereby engages CONTRACTOR to perform the following as more fully
defined in the Scope of Work, attached as Exhibit "A" hereto, referred to
hereafter as the "Work". In completing the Work required herein, CONTRACTOR
shall:
(a) Furnish all of the materials as are necessary to complete the
Work described herein, except as otherwise provided herein;
(b) do everything required by this Contract (including the General
Conditions as defined in Article 6 and Special Conditions as
defined in Article 11), the Drawings and Specifications, and any
other documents, drawings and specifications and/or agreements
which now or in the future become a part of the entire Contract
of the parties hereto in respect to the Work contemplated
herein.
Hereinafter, this Contract, which includes the Drawings and
Specifications, and all Exhibits, Attachments, and Schedules hereto, shall be
collectively referred to as the "Contract" or "Contract Documents". The specific
Work to be performed by CONTRACTOR, as more fully set out in Exhibit A, Scope of
Work, is as follows:
(1) CONTRACTOR shall furnish all project management services,
construction management, engineering, design, drawings, materials,
equipment, tools, installation labor, supervision, and insurance (as
more fully set forth in the Scope of Work attached hereto as Exhibit
"A"), to provide OWNER with a Mechanically Complete new 6600 short tons
per day (STPD) clinker production line at OWNER'S Oro Grande Cement
Plant, Oro Grande, California (hereinafter called "Plant Site").
(2) CONTRACTOR shall furnish Parent Guarantees from Zachry
Construction Corporation and AMEC plc in the form attached hereto as
Exhibit B-1.
1.2 OWNER shall furnish or otherwise be responsible for the following:
(1) OEM Equipment and OEM Services as set forth in the Project
Progress Schedule, including OEM engineered drawings;
(2) Environmental permits and fees;
(3) Geotechnical investigation report and topographical surveys;
(4) Electrical power (480 volt), non-potable water for the
CONTRACTOR'S main construction offices;
(5) Temporary construction power necessary to completely perform the
Work within close proximity to the Jobsite. OWNER shall pay for cost of
such services. The CONTRACTOR will be responsible for extending these
services to its Jobsite. Water and sanitary for other construction
trailers and CONTRACTOR'S employees will be provided by CONTRACTOR;
(6) Appoint an OWNER'S Representative who shall be authorized to act
on behalf of Owner;
(7) Provide full and unrestricted access to the Plant Site for
construction of the Work;
(8) Abide by, and require others under OWNER'S control to abide by
all reasonable Jobsite safety rules promulgated by CONTRACTOR;
(9) Pay all real property taxes assessed against the Plant Site and
the Work;
(10) Advise of the existence of any known contamination, and supply
data which shall evidence that the Jobsite is clean and free of above or
underground obstructions, fissures, faults or other similarly hidden
features or obstructions which might interfere with the completion of
the Work;
(11) Report to CONTRACTOR any known pre-existing hazardous
conditions, and to the extent correction is necessary and advisable for
the Work to be completed, to correct such known conditions; provided
that this shall not shift from CONTRACTOR to OWNER the duty of safety at
the Jobsite, which shall remain the sole responsibility of CONTRACTOR;
(12) All Owner Services in Section 6.10;
(13) Timely performance of all Owner obligations in the Project
Progress Schedule;
(14) *
(15) OWNER will participate, and require others under its control to
participate in the Z-PEPP(TM) Program; and
(16) Timely delivery as per Project Progress Schedule of
Owner-Supplied Equipment and design information and OEM Equipment to the
Jobsite in a manner that will not delay CONTRACTOR in the performance of
its obligations as set forth in the approved Project Progress Schedule;
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Provided, however, in the event of OWNER's failure to comply with
subsections (1), (2), (3), (4), (5), (13) or (16) above, CONTRACTOR's
sole remedy shall be the right to a Change Order pursuant to Section
6.13.
ARTICLE 2. TIME OF COMPLETION
A Limited Notice to Proceed ("Limited Notice to Proceed" or "LNTP") was
executed by and between the Parties on May 4, 2005. The Parties intend that this
Contract will supersede the LNTP and that any Work performed in accordance with
the LNTP shall be subject to the terms of this Contract.
CONTRACTOR will perform the Work in accordance with the Project Progress
Schedule and shall be completed on or before October 5, 2007, as may be adjusted
pursuant to this Contract. OWNER and CONTRACTOR agree that these dates are
subject to timely execution of this Contract, on time delivery of the OEM
Equipment, and any extensions of time provided for elsewhere in this Contract
and OWNER meeting its obligations hereunder.
ARTICLE 3. THE CONTRACT PRICE
OWNER shall pay CONTRACTOR for the performance of this Contract, subject
to any additions and deductions provided for herein, the Lump sum Contract Price
("Lump Sum Contract Price") as follows:
LUMP SUM CONTRACT PRICE *
ARTICLE 4. PROGRESS PAYMENTS
Payments made pursuant to the Agreement for Limited Notice to Proceed,
dated May 4, 2005 between OWNER and CONTRACTOR shall suffice as advance payment
and be applied to this Contract. All succeeding progress payments shall be made
in accordance with the terms set forth in the following paragraphs of this
Article.
Prior to Contract signing, CONTRACTOR shall submit a Schedule of Values
for Progress Payments against which, once it has been accepted by OWNER in
writing, progress payments shall be paid. The Schedule of Values for Progress
Payments shall include engineering, equipment, and construction totaling the
Lump Sum Contract Price. On or before the tenth (10th) Day of each month,
CONTRACTOR shall submit an itemized invoice for payment pursuant to the Schedule
of Values for Progress Payments which is subject to verification and approval by
OWNER. CONTRACTOR shall substantiate engineering services, procurement
commitments and equipment and materials-in-progress with such additional
documentation as shall reasonably be requested by OWNER. CONTRARCTOR will retain
and make available for tax purposes supporting detail information related to the
invoice as requested by OWNER, including details of engineering and design
services performed by the CONTRACTOR or its subcontractor. If required by the
California Board of Equalization Sales and Use Tax audit of OWNER, CONTRACTOR
will provide OWNER with the necessary documentation supporting the amount of
Sales and Use Taxes paid by CONTRACTOR.
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OWNER shall make payments on account of this Contract, except as
otherwise provided herein, as follows: On or before the tenth (10th) Day of the
following month after receipt of the invoice, OWNER shall pay the undisputed
amount of the invoice, as per the Project Progress Schedule. Provided, that
OWNER shall be entitled to withhold from the final payment or immediately
preceding payments, as necessary, a sum, not to exceed $3,000,000. If OWNER
foresees that the final payment will not equal this amount, OWNER may withhold
from the immediately preceding invoice or invoices, as necessary to accumulate
this sum. OWNER may retain this sum for a period of time not to exceed ninety
(90) Days after Mechanical Completion, and may deduct from such sum any amounts
necessary to obtain release of liens on the Work or complete other items
required to be completed by CONTRACTOR hereunder but which remain unreleased or
uncompleted after reasonable notice to CONTRACTOR. After expiration of such 90
Day period, OWNER will refund to CONTRACTOR any amounts remaining from such sum.
Within ten (10) Days after OWNER receives CONTRACTOR's invoice, OWNER
shall notify CONTRACTOR concerning any invoiced amount that is in dispute and
the contractual basis for such dispute. OWNER'S payment and CONTRACTOR's
acceptance of any payment shall not be deemed to constitute a waiver by either
party of amounts that are then in dispute. CONTRACTOR and OWNER shall use their
reasonable efforts to resolve all disputed amounts as expeditiously as possible
in accordance with the provisions of Article 8.
If an invoice is not delivered by CONTRACTOR on or before the 10th of
the month, payment may be withheld for an additional thirty (30) Days for that
portion of the invoice which is not in compliance with the invoicing
requirements in this Article 4. OWNER shall in no event make payments in excess
of the contract value of labor, materials, equipment, services, etc., in
progress, furnished or completed to date. CONTRACTOR agrees that monies received
for the performance of this Contract shall be used primarily for labor and
materials entering into Work under this Contract and said monies shall not be
diverted to satisfy obligations of CONTRACTOR on other contracts.
Upon receipt of the partial payments, CONTRACTOR shall furnish OWNER
with such partial releases and waivers of lien from itself and its
subcontractors and significant suppliers as OWNER may reasonably request from
time to time on labor and/or material and/or other claims.
All invoices shall reference OWNER'S Contract Number and Item Number
____________ and be mailed to:
Riverside Cement Company
3500 Porsche Way, Suite 150
P.O. Box 51479
Ontario, Ca. 91761-0079
Attention: William O. Brown
Payments made to CONTRACTOR by OWNER hereunder shall be made by an ACH
electronic payment in the following format, in order of preference: CCD+ or CTX
or CTP format, to the account of CONTRACTOR as specified on the invoice. If
undisputed payments are not made as required by the Contract terms, CONTRACTOR
may invoice interest at the prime rate of interest as published from time to
time in the Wall Street Journal plus one percent (1%) until paid.
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ARTICLE 5. SUBSTANTIAL COMPLETION AND MECHANICAL COMPLETION
5.1 Certificate of Substantial Completion. Once all of the requirements for
Substantial Completion have been satisfied CONTRACTOR shall so certify to OWNER
by submitting a Certificate of Substantial Completion to OWNER, a copy of which
is attached hereto as an Exhibit to Section 4 of Exhibit A. Within seven (7)
Days following receipt of such Certificate of Substantial Completion, OWNER
shall notify CONTRACTOR by execution of this Certificate whether OWNER concurs
that CONTRACTOR has met the requirements for Substantial Completion. Such
certification shall not be deemed to waive any rights of OWNER against
CONTRACTOR under this Contract. Concurrent with such certification of
acceptance, which shall be evidenced by execution of the Certificate of
Substantial Completion by OWNER, Substantial Completion will have occurred and
OWNER shall assume care, custody, and control of and shall thereafter assume
sole responsibility for risk of loss for that portion of the Work. If OWNER
determines that CONTRACTOR has not met Substantial Completion, then OWNER shall
deliver a written notice to CONTRACTOR describing in reasonable detail the
deficiencies noted and corrective action recommended. Substantial Completion
shall not be deemed to have occurred, and CONTRACTOR shall be required to
perform the remaining requirements for Substantial Completion and submit a
revised Certificate of Substantial Completion. Any dispute regarding such
certification shall be resolved in accordance with the procedure set forth in
Article 8. If, following the initial or any subsequent Certificate of
Substantial Completion, OWNER has not delivered to CONTRACTOR an acceptance or
rejection of such certificate as required herein, Substantial Completion will be
deemed to have occurred and the date of CONTRACTOR's most recent Certificate of
Substantial Completion shall be deemed the date that Substantial Completion was
actually achieved.
5.2 Certificate of Mechanical Completion. Once CONTRACTOR has performed all
of the requirements for Mechanical Completion, CONTRACTOR shall so certify to
OWNER by submitting a Certificate of Mechanical Completion to OWNER, a copy of
which is attached hereto as an Exhibit to Section 4 of Exhibit A. Within seven
(7) Days following receipt of such Certificate of Mechanical Completion, OWNER
shall notify CONTRACTOR by execution of this Certificate whether OWNER concurs
that CONTRACTOR has met the requirements for Mechanical Completion. Such
certification shall not be deemed to waive any rights of OWNER against
CONTRACTOR under this Contract. Concurrent with such certification of
acceptance, which shall be evidenced by execution of the Certificate of
Mechanical Completion by OWNER, Mechanical Completion will have occurred and
OWNER shall assume care, custody, and control of and shall thereafter assume
sole responsibility for risk of loss for the Work. If OWNER determines that
CONTRACTOR has not met Mechanical Completion, then OWNER shall deliver a written
notice to CONTRACTOR describing in reasonable detail the deficiencies noted and
correction action recommended. Mechanical Completion shall not be deemed to have
occurred and CONTRACTOR shall be required to perform the remaining requirements
for Mechanical Completion and submit a revised Certificate of Mechanical
Completion. Any dispute regarding such certification shall be resolved in
accordance with the procedure set forth in Article 8. If, following the initial
or any re-issuance of the Certificate of Mechanical Completion, OWNER has not
delivered to CONTRACTOR an acceptance or rejection of such certification within
seven (7) Days as required herein, Mechanical Completion will be deemed to have
occurred and the date of CONTRACTOR's most recent Certificate of Mechanical
Completion shall be deemed the date that Mechanical Completion was actually
achieved.
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OWNER shall execute the Certificate of Mechanical Completion, provided
that each of the following conditions has been fulfilled:
(a) Said Work has been completed in all respects in accordance with
the Contract Documents;
(b) CONTRACTOR has performed all its obligations under this Contract
(except warranty and other obligations which, by their terms, are not
then due); and
(c) CONTRACTOR has submitted reasonable evidence in the form of a
final release and waiver of lien from itself and its subcontractors to
OWNER that CONTRACTOR and its subcontractors have paid all payrolls,
material bills, and other indebtedness connected with said Work.
ARTICLE 6. GENERAL CONDITIONS
The general conditions of this Contract are as follows:
6.1 Performance of Work. All Work to be performed by CONTRACTOR under this
--------------------
Contract shall be executed in conformity with the Drawings and Specifications,
and CONTRACTOR shall do no Work without OWNER'S approval of Drawings and
Specifications, in accordance with Section 6.4.
CONTRACTOR shall provide and pay for all materials, labor, water, tools,
equipment, light, transportation, and other facilities necessary for the
execution and completion of Work as set out in Exhibit A, Scope of Work. All
materials and equipment incorporated into the Work shall be new, and CONTRACTOR
represents that all Work under the Contract shall be of a finished nature.
CONTRACTOR agrees to prosecute its Work as is necessary to cause the
Work to be completed in accordance with the schedule described in Section 4.1 of
Exhibit A, Project Progress Schedule, attached hereto, subject to adjustments as
provided herein.
CONTRACTOR shall be fully responsible for all necessary expediting of
its orders for materials and equipment, regardless of where placed to avoid
delays in its Work. Defective materials or materials damaged in the course of
installation or test shall be replaced or repaired in a manner conforming to the
Contract Documents. All necessary cutting shall be neatly and carefully done and
repaired in an approved and workmanlike manner. No cutting into the constructive
parts of the buildings and structures shall be done without approval of OWNERS
Representative. All sheets shall be saw cut. No torch burned metal sheets will
be accepted.
CONTRACTOR shall be fully responsible to install all OEM Equipment in
the manner recommended by the manufacturer of such equipment, and to maintain
such OEM Equipment as recommended by the manufacturer until Substantial
Completion. In the event CONTRACTOR does not have necessary installation or
maintenance documentation for a particular piece of OEM Equipment, it shall be
CONTRACTOR's responsibility to inform the OEM or OWNER of its need for
additional information or specifications in advance of such installation or
maintenance.
Page 6 of 32
6.2 Prosecution of the Work. CONTRACTOR agrees to prosecute its Work in
-------------------------
accordance with the Contract and Exhibit A, Scope of Work.
6.3 Construction Drawings. CONTRACTOR shall furnish promptly to OWNER all
-----------------------
drawings and schedules required in connection with its Work, but approval of
such drawings and schedules shall not relieve CONTRACTOR of its responsibility
of complying with the requirements of the Drawings and Specifications of OWNER.
CONTRACTOR shall take all field measurements necessary for its Work and shall
assume responsibility for their accuracy.
6.4 Approval of Drawings. Detail, design and schematic drawings of the Work
---------------------
shall be submitted electronically (via AMEC website) by CONTRACTOR to the OWNER
for approval thereof. CONTRACTOR, upon request from OWNER, shall submit to
OWNER, for review only, all relevant design calculations. One (1) set of
drawings is to be marked by OWNER as "Approved", "Approved as Noted" or
"Disapproved as Noted" and returned to CONTRACTOR. Provided CONTRACTOR and OWNER
agree with changes made by OWNER in drawings marked "Approval as Noted" or
"Disapproved as Noted" said drawings shall be corrected by CONTRACTOR and
provided to OWNER. If OWNER and CONTRACTOR agree that any of the changes or
modifications are outside the Scope of Work or Project Progress Schedule, and if
changes or modifications are made after OWNER's written approval (which is only
deemed to be provided if CONTRACTOR has complied with all procedures set forth
in this Contract regarding change orders), such changes or modifications could
adjust the Lump Sum Contract Price (either up or down) and/or the Project
Progress Schedule as provided in Section 6.13, Changes. CONTRACTOR shall utilize
the most reasonably expeditious means of mail or electronic transmittal delivery
to assure timely submittal of drawings to OWNER. The failure of OWNER to approve
or disapprove drawings within seven (7) Days after receipt thereof shall be
construed as approval thereof by OWNER. Upon approval of such drawings, they
shall become part of the Contract deliverables. Approved drawings shall be
issued by CONTRACTOR and one (1) set of electronic drawings will be furnished to
OWNER. Approval of drawings hereunder by OWNER shall not constitute a waiver or
release of any kind, and shall not relieve CONTRACTOR of its responsibility to
comply fully and completely with the Scope of Work, warranties, representations
and all other commitments or responsibilities set forth in this Contract.
CONTRACTOR shall furnish to Owner one (1) electronic (via AMEC website)
certified drawing of machinery or equipment procured by CONTRACTOR as described
herein, including all applicable electrical wiring diagrams or to invoice
address shown above if not available electronically.
CONTRACTOR shall furnish to Owner an electronic version (via AMEC
Website) of installation, operation and maintenance manuals and an electronic
version of recommended spare parts list or to invoice address shown above if not
available electronically.
6.5 As-Built Drawings. Within sixty (60) Days after Mechanical Completion
-------------------
(as hereinafter defined) CONTRACTOR shall furnish to the OWNER one (1)
electronic version of drawings depicting the Work as actually completed; such
drawings shall show the "as-built" details of the Work, limited to MFDs, P&IDs,
electrical connection and underground.
Page 7 of 32
6.6 Specifications and Drawings.
----------------------------
6.6.1. Data Furnished by CONTRACTOR. The CONTRACTOR shall furnish an electronic
-----------------------------
version of drawings and pertinent instructions required for the installation and
operation of equipment supplied hereunder in accordance with the provisions of
this Contract. A nominal charge will be made to cover the cost of additional
copies. All copies of drawings, plans, specifications and instructions developed
by CONTRACTOR for the Contract which are not owned by or subject to
confidentiality restrictions by a third party shall become the property of
OWNER. OWNER agrees that any reuse of such drawings, plans, specifications and
instructions without prior written verification or adaptation by CONTRACTOR for
the specific purpose intended will be at OWNER's sole risk and without liability
or legal exposure to CONTRACTOR. All such drawings, plans, specifications and
instructions shall at OWNER'S request be delivered to OWNER upon Mechanical
Completion of the Work, but CONTRACTOR may retain and use copies thereof and any
technology embodied therein. Any data or drawings required by the Contract to be
given to the OWNER identified as confidential or proprietary to a third party
shall remain the property of such third party, to be used only in connection
with the construction, operation and maintenance of the equipment and shall not
be disclosed to third parties without the prior written consent of
CONTRACTOR/OWNER. Provided, however, that any party which OWNER or its successor
wishes to hire to maintain, enhance, or add to the Work may be permitted to view
and copy solely for such purposes any data or documents delivered to OWNER
pursuant to this Contract, to the extent necessary or helpful to perform the
duties for which such third party was retained. Provided, further, that no
confidentiality restrictions shall apply to information which becomes publicly
available through no fault of the OWNER, is independently developed by OWNER, or
was in the possession of OWNER or provided to OWNER through some other source.
6.6.2. Data Furnished by OWNER. The OWNER shall furnish CONTRACTOR with such
-----------------------
information as is specified in this Contract to be the responsibility of OWNER,
and CONTRACTOR shall be entitled to rely on the accuracy and completeness of all
such information in the performance of its Work hereunder. OWNER shall furnish
the CONTRACTOR an electronic copy, if available, or hard copy of such
information required hereunder; additional copies will be furnished upon request
by CONTRACTOR. Information regarding the Jobsite, the business and operations of
OWNER, and any other information provided by the OWNER which is not publicly
known and not developed independently by CONTRACTOR shall remain the proprietary
and confidential property of OWNER and shall not be disclosed to any third party
without the advance written consent of OWNER. Operational data regarding the
completed plant, including estimated production costs to produce clinker from
the completed plant, and other sensitive financial and operational information
regarding OWNER'S operation of the plant shall remain the property of OWNER and
shall not be disclosed by the CONTRACTOR or its subcontractors to any party
without the advance written consent of OWNER. In the event any specification,
direction, design or innovation provided by OWNER can be protected under patent
or other intellectual property laws, such intellectual property provided by
OWNER shall remain the sole and exclusive property of OWNER and no license of
any intellectual property of OWNER is deemed given by OWNER.
Page 8 of 32
6.7 Storage of Equipment and Materials. CONTRACTOR shall receive, unload,
----------------------------------
store, and take proper care of all materials and equipment involved in this
Contract. All equipment and materials to be stored or used at OWNER'S Plant Site
must be stored so as not to interfere with the construction of the balance of
the Plant Site. Attention must be given to the storage of materials as no
watermarked, dirty, or marred materials shall be accepted in the installation.
6.8 Safety. CONTRACTOR shall provide for safety precautions and programs in
-------
connection with its activities at the Jobsite and, in connection therewith,
shall comply with the requirements of MSHA, Occupational Safety and Health
Administration (OSHA), OWNER's Safety Procedures, and any and all state,
federal, and local regulations relating to the performance of the Work at the
Jobsite.
CONTRACTOR shall submit to OWNER a copy of its Safety Procedures Manual
for OWNER'S approval.
All of CONTRACTOR'S employees will be required upon entering onto
OWNER'S Plant Site to wear hard hats, safety glasses, safety shoes and any other
protective equipment either required by law or otherwise deemed necessary for
the safety of OWNER'S employees as well as CONTRACTOR'S employees.
CONTRACTOR shall comply with MSHA regulations. Citations arising as a
result of CONTRACTOR or its Subcontractors not following MSHA regulations will
be for CONTRACTOR to pay or defend.
CONTRACTOR shall provide safety training as required by MSHA for
CONTRACTOR'S employees who work on the Plant Site. This training must be
completed and written confirmation of such must be furnished to OWNER before
Work can commence. Training will be provided by CONTRACTOR obtaining an
MSHA-certified instructor permit and providing training as required by MSHA
under CFR Part 6 or Subpart 13.
6.9 Ingress and Egress from OWNER'S Premises. At all times during the term
------------------------------------------
of this Contract, all of CONTRACTOR'S employees shall ingress and egress OWNER'S
Jobsite using the entrance/construction gate and parking area agreed to by OWNER
for CONTRACTOR'S workers adjacent to the Plant Site. OWNER shall, at all times
necessary for CONTRACTOR'S performance under the Contract, provide free and
clear access to the Jobsite to CONTRACTOR, its agents, employees and
subcontractors.
6.10 OWNER'S Services. OWNER shall at its expense provide CONTRACTOR with the
-----------------
following:
(a) Information locating all above ground or underground utilities,
obstructions and services (electrical, water, gas, etc.) as known to
OWNER;
(b) An Owner's Representative designated in writing who shall be
authorized to act on OWNER'S behalf with respect to the Contract;
(c) All the required fuel, flushing oil, utilities, and raw
materials required for Dry Run Testing;
Page 9 of 32
(d) Accurate topographical plans and subsurface data;
(e) "First Fill" lubricant material;
(f) Phone lines for CONTRACTOR to tie into for temporary facilities;
(g) Free and clear access across the Jobsite;
(h) All necessary operating and design data for OEM/BOP and OWNER
supplied equipment;
(i) A prompt review and, if acceptable, approval of CONTRACTOR
Drawings and Specifications in accordance with this Contract and any
other assistance that CONTRACTOR may reasonably require for carrying out
the Work hereunder including prompt review and, if acceptable, approval
of all equipment and fabricated items and vendor and vendor-supplied
equipment in accordance with this Contract, and prompt and timely
performance of all OWNER required obligations;
(j) Commercially reasonable efforts to help CONTRACTOR obtain
concrete, if CONTRACTOR so requests, in the event it has difficulty
obtaining same due to local market conditions; with no obligation to
OWNER relating to the provision or failure to provide such concrete; and
(k) All of the items OWNER shall furnish in accordance with
Article 1.
6.11 CONTRACTOR'S Representative. The CONTRACTOR shall employ a qualified,
-----------------------------
competent representative who shall be in attendance at the site during the
progress of the Work and shall represent the CONTRACTOR.
6.12 Concealed Conditions. Should concealed conditions be encountered in the
---------------------
performance of the Work below the surface of the ground or should concealed or
unknown conditions be at variance with the conditions indicated by the documents
provided by OWNER to CONTRACTOR and referenced in the Basis of Price section of
the Scope of Work in Exhibit A, then the Lump Sum Contract Price and Project
Progress Schedule may be equitably adjusted by Change Order as hereinafter
defined in accordance with Section 6.13, Changes. Such varying conditions may
include without limitation previously unknown subsurface and latent physical
conditions at the Jobsite, archeological finds of historical or cultural
significance, protected or endangered species of plants and animals, or other
conditions that may preclude CONTRACTOR from proceeding with the Work for
reasons of health, safety, or legal restriction. Without waiving its rights
hereunder, CONTRACTOR agrees to notify OWNER of such conditions promptly,
whereupon OWNER will promptly investigate the same and issue appropriate orders
or instructions to CONTRACTOR.
6.13 Changes. The right is reserved by OWNER to make changes in, deviations
--------
from, additions to, and omissions from the Work herein contracted, and the Lump
Sum Contract Price and Project Progress Schedule shall be adjusted accordingly.
Before proceeding with any change, deviation, addition or omission, CONTRACTOR
will first obtain written authorization from OWNER, to be signed exclusively by
William O. Brown, or such person as OWNER or he may designate in writing. Any
and all changes to the Scope of Work and the Lump Sum Contract Price must first
be agreed to in writing by OWNER and CONTRACTOR.
Page 10 of 32
6.13.1 CONTRACTOR shall be entitled to adjustments, in accordance with
Section 6.13.2, in the Lump Sum Contract Price and Project Progress
Schedule for the following events:
(a) Any part of the Work is delayed by any act or failure to act by
OWNER or third parties performing Work for OWNER to the extent such
action is the responsibility of OWNER as set forth in this Contract or
by Force Majeure as provided in Section 6.17;
(b) CONTRACTOR'S costs are increased due to changes in any
applicable laws, codes or other governmental regulations, or OWNER'S
Safety Procedures, subsequent to the execution of this Contract, or a
substantial change in the method of imposition or enforcement of any
applicable laws, codes or regulations, or any special requirements of
any governmental authority;
(c) CONTRACTOR'S costs are increased due to encountering any
concealed or unknown conditions in accordance with Section 6.12 above
unless such conditions are specified by this Contract to be the
responsibility of CONTRACTOR;
(d) CONTRACTOR'S costs are increased due to any variance in design
conditions or other information not otherwise required or specified by
this Contract, if any, provided by OWNER's Representative;
(e) OWNER's request for or approval of performance of services not
otherwise required by this Contract in excess of CONTRACTOR's standard
work day or work week or such shorter times as are provided by
applicable collective bargaining agreements or on a holiday customarily
observed by CONTRACTOR (including an allowance for loss of efficiency
due to overtime work or shift work); or
(f) any and all other events which entitle CONTRACTOR to a Change
Order pursuant to this Contract.
6.13.2 In connection with any change, addition or event specified in
this Section 6.13, CONTRACTOR shall promptly submit in writing to OWNER
pursuant to a mutually agreed upon procedure, such proposed adjustments
to the Lump Sum Contract Price (including for G&A and fee * as a result
of the change or addition), Project Progress Schedule, and affected
Contractor obligations, if any; and OWNER and CONTRACTOR shall negotiate
in good faith regarding the amount of such adjustments and shall attempt
in good faith to agree in writing as to such adjustments. The parties
agree that, so far as reasonably possible, no additional Work shall be
performed until either the amount of or nature of the adjustment with
respect thereto has been mutually agreed upon. In no case, however,
shall CONTRACTOR perform any such additional or different Work until
OWNER has authorized CONTRACTOR by Change Order to proceed therewith.
In the event that OWNER and CONTRACTOR cannot agree on the adjustment to
the Lump Sum Contract Price, Project Progress Schedule, or affected
Contractor obligations for a Change Order to which CONTRACTOR is
entitled pursuant to Section 6.13, upon OWNER's written direction to
CONTRACTOR, CONTRACTOR shall proceed with the additional or different
Work provided in the Change Order and OWNER shall pay to CONTRACTOR all
undisputed amounts and fifty percent (50%) of the disputed amounts while
CONTRACTOR is continuing performance until the dispute is finally
resolved.
Page 11 of 32
In the event CONTRACTOR contends that it is entitled to a Change Order,
but OWNER disagrees, CONTRACTOR is under no obligation to proceed with
such disputed Work. If however, OWNER issues CONTRACTOR a written Change
Order for such Work, CONTRACTOR shall proceed with the disputed Work,
provided in the Change Order and OWNER shall pay to CONTRACTOR all
undisputed amounts and fifty percent (50%) of the disputed amounts while
CONTRACTOR is continuing performance until the dispute is finally
resolved.
If any dispute is not resolved within thirty (30) Days of the submission
in writing by CONTRACTOR to OWNER of such proposed adjustments or
entitlement to a Change Order, CONTRACTOR or OWNER may submit such
dispute for resolution in accordance with Article 8, Resolution of
Disputes. In the event the Work is delayed pending such resolution, the
Arbitrators shall schedule the Arbitration to be completed with a final
verdict not more than 90 Days after submission by either party.
6.13.3 CONTRACTOR shall use all commercially reasonable efforts to
reschedule and reallocate the Work in a manner that minimizes the impact
of any Change Order on the overall cost and schedule of the Project.
6.14 Protection of Work. It is mutually agreed that CONTRACTOR will assume
-------------------
responsibility for protection of materials and equipment left on the Jobsite.
CONTRACTOR shall use reasonable efforts to continuously maintain adequate
protection of all its Work from damage, such protection to include a watchperson
or watchpersons when necessary, and shall use reasonable efforts to protect
OWNER'S property from injury or loss arising in connection with or resulting
from CONTRACTOR'S Work or materials or labor necessary to perform the Work in
this Contract. CONTRACTOR shall make good any such damage, injury, or loss,
except such as may be caused by the negligent act or omissions or intentional
misconduct or gross negligence of agents or employees of OWNER. CONTRACTOR will
be liable for the first $10,000 of loss per occurrence to the Work and/or
materials and equipment for which CONTRACTOR is responsible until Substantial
Completion. Except to the extent CONTRACTOR is responsible for loss or damage
pursuant to this Section 6.14, OWNER shall retain any and all risk of loss or
damage to the Work (which will be deemed for purposes of this provision to
include any goods CONTRACTOR or its subcontractors or suppliers may provide to
be installed). For loss or damage caused by all other causes and for any amounts
in excess of this per occurrence deductible, OWNER agrees to look solely to the
proceeds of the OWNER-furnished insurance described in Article 7 for recovery
for loss, and not seek recovery against CONTRACTOR or any subcontractor for such
loss. CONTRACTOR shall take all necessary precautions for the safety of
CONTRACTOR'S employees on the Work, and it shall designate a responsible member
of its organization on the Work, whose duty shall be the prevention of
accidents. The name and position of any person so designated shall be reported
to OWNER by CONTRACTOR. CONTRACTOR shall provide, at its expense, whatever
storage sheds, workshops and offices necessary for the performance of the
Contract, and shall remove the same upon the completion of the Work. CONTRACTOR
shall clean up and remove from the Jobsite as directed by OWNER, all rubbish and
debris. In no manner limiting the foregoing, CONTRACTOR shall remove all
construction debris from the Jobsite at such times as will keep the Work area
safe and uncluttered and at any time promptly upon request of OWNER.
Page 12 of 32
6.15 Access to and Inspection of Work. CONTRACTOR shall supervise, inspect
---------------------------------
and be responsible for the Work and shall perform the Work strictly in
compliance with the Drawings and Specifications and all other provisions of this
Contract. OWNER and any mortgagee of OWNER, if any, their agents and
representatives shall, at all reasonable times, and after prior notification to
CONTRACTOR, have the right of entry and free access to inspect all Work done,
labor performed and materials furnished in and about the Jobsite, compliant to
all CONTRACTOR and State or Federal Safety Requirements.
6.16 Correction of Work. At CONTRACTOR'S sole cost and expense, CONTRACTOR
-------------------
shall promptly correct, repair or replace (the parties to mutually agree whether
to correct, repair or replace) any defective materials and/or workmanship
supplied by CONTRACTOR to conform to the Contract requirements. Provided,
however, if inspection reveals that any correction of Work performed by
CONTRACTOR was not due to defective materials and/or workmanship supplied by
CONTRACTOR, such Work shall be treated as a Change in accordance with Section
6.13 above.
Should CONTRACTOR refuse or neglect to proceed at once with the
correction of rejected or defective materials and/or workmanship after receiving
notice to do so within the Warranty Period, it is agreed that OWNER shall have
the right and power to have the defects remedied at the expense of CONTRACTOR,
and CONTRACTOR agrees to pay to OWNER within thirty (30) Days any and all
expense paid or directly incurred by OWNER in remedying such defects together
with interest thereon at the prime rate of interest as published from time to
time in the Wall Street Journal plus one percent (1%) until paid. CONTRACTOR
warrants all Work performed hereunder against defective materials and/or
workmanship, for a period of one (1) year from the date of Mechanical Completion
(the "Warranty Period").
6.17 Delays and Extension of Time. If CONTRACTOR is delayed at any time in
------------------------------
the progress of the Work, unless otherwise permitted by this Contract, by (i)
any act or neglect of OWNER, or any employee of OWNER, or by such act of a
separate contractor or agent employed by OWNER, or (ii) Force Majeure (as
defined in Article 14), then the Project Progress Schedule shall be extended as
provided in Section 6.13. In addition to such extension of time, there may be
other adjustments in accordance with Section 6.13. CONTRACTOR shall give OWNER
notice of any delay affecting the Work as soon as possible but in no event later
than five (5) Days after receipt of knowledge of such delay. Notwithstanding the
foregoing, CONTRACTOR shall not be entitled to any extension of time or
increased payments because of any delays occasioned by inclement or unfavorable
weather normally experienced in the geographic area of the Plant Site (as
reported by the National Weather Service or a similar agency) or any delays
occasioned by labor disputes of employees of CONTRACTOR or any of its
subcontractors at the Jobsite. OWNER shall not be liable to CONTRACTOR because
of any such delays caused by labor disputes. If one or more Force Majeure events
causes CONTRACTOR to incur costs in excess of $200,000 in the aggregate,
CONTRACTOR shall be entitled to a Change Order pursuant to Section 6.13 for its
reasonable out-of-pocket costs actually and necessarily incurred in excess of
$200,000 as a result of such Force Majeure event(s), including demobilization,
remobilization, insurance, standby and escalation costs. Such Change Order may
provide that CONTRACTOR may add such costs to invoices provided pursuant to
Article 4 and CONTRACTOR shall provide such supporting information and
documentation as OWNER may reasonably request. OWNER shall pay such invoices as
provided in Article 4. In the event of a Force Majeure delay that continues for
a period of more than sixty (60) Days, and OWNER and CONTRACTOR fail to agree to
such a Change Order before expiration of such 60 Day period, CONTRACTOR shall
have the right to terminate this Contract upon at least thirty (30) Days prior
written notice to OWNER and OWNER shall have no liability to CONTRACTOR for lost
profits or any other costs related to items which are not actually delivered to
OWNER prior to CONTRACTOR'S cancellation.
Page 13 of 32
6.18 Suspension of Work. OWNER shall have the right to suspend the
---------------------
performance of the Work at anytime by giving twenty-four (24) hours prior notice
in writing of such action plus such reasonable time as may be required for the
suspension of the Work so as to beneficially conserve what Work has been done or
is actually in progress for future use. No prior notice in writing is required
if suspension is necessary as a result of CONTRACTOR violating safety
procedures.
Suspension of the Work shall be made without prejudice to the claims of
either party in respect of any antecedent breach of the terms of this Contract.
CONTRACTOR shall, during the period of suspension, use all reasonable
efforts to utilize its personnel in such a manner as to minimize the cost
associated with the suspension. Upon receipt of any notice of suspension,
CONTRACTOR shall, unless the notice requires otherwise:
(a) Immediately discontinue the performance of the Work to the
extent specified in the notice;
(b) Take no further action relative to subcontractors or suppliers
with respect to suspended Work other than to the extent required in the
notice;
(c) Promptly make every reasonable effort to obtain suspension upon
terms satisfactory to the OWNER of all subcontracts and purchase
agreements to the extent they relate to portions of the Work suspended;
and
(d) Upon receipt of notice to resume the suspended Work, promptly as
practicable resume the suspended Work to the extent required in the
notice.
As compensation to CONTRACTOR for any suspension, CONTRACTOR shall be
reimbursed for all reasonable costs associated with the mobilization and
demobilization of CONTRACTOR and its subcontractors and all reasonable costs in
bringing the Work to an orderly state of suspension, as well as all cancellation
costs and any expenses reasonably incurred, including escalation costs. Any
suspension or Work stoppage due to CONTRACTOR's or CONTRACTOR's subcontractors'
or agents' safety violations shall be at CONTRACTOR'S expense. In addition,
standby costs incurred by CONTRACTOR during the period of suspension (except for
safety violations) incurred in keeping its organization committed to the Work in
a standby status shall be paid by OWNER on a reimbursable basis. These and any
further adjustments to the Lump Sum Contract Price or Project Progress Schedule
shall be made in accordance with Section 6.13, Changes. In the event of a
suspension that continues for a period of more than sixty (60) Days, CONTRACTOR
shall have the right to terminate this Contract in accordance with Section 6.20.
In the event any undisputed amount required to be paid or advanced to
CONTRACTOR by OWNER under this Contract is not paid or advanced to CONTRACTOR by
OWNER as required, CONTRACTOR, by giving seven (7) Days written notice, may, at
its option, suspend the Work in whole or in part and/or terminate this Contract.
Subject to its rights under Section 6.20, Right to Terminate Contract, if the
Work is suspended and not terminated, CONTRACTOR shall resume performance of the
suspended Work as promptly as practicable after OWNER makes full payment or
advancement to CONTRACTOR of such unpaid amount. During such suspension,
CONTRACTOR shall be entitled to compensation pursuant to the provision of this
Section. In the event of termination, CONTRACTOR shall be entitled to damages
resulting from such termination, as otherwise limited or required by this
Contract.
Page 14 of 32
6.19 OWNER'S Right to Do Work. If CONTRACTOR should neglect to prosecute any
-------------------------
substantive portion of the Work properly, OWNER, after five business (5) days'
written notice to CONTRACTOR and CONTRACTOR fails to promptly initiate
corrective action, may, without prejudice to any other remedy it may have, make
good such deficiencies and may deduct the cost thereof from the payments then or
thereafter due CONTRACTOR, and if such expenditures, together with said losses,
damages and extra expenses, exceed the amount otherwise due to CONTRACTOR
hereunder, CONTRACTOR agrees to pay to OWNER within thirty (30) Days the full
amount of such excess, together with interest thereon at the prime rate of
interest as published from time to time in the Wall Street Journal plus one
percent (1%) until paid.
6.20 Right to Terminate Contract If either Party shall be adjudged a
------------------------------
bankrupt, or if a Party should make a general assignment for the benefit of its
creditors, or if a receiver should be appointed on account of its insolvency, or
if it should persistently or repeatedly refuse or should fail, except in cases
for which extension of time is provided, to supply enough properly skilled
workmen or proper materials, or if it should fail to make prompt payment to the
other Party, subcontractors or for material or labor, or persistently disregard
laws, regulations or ordinances, or otherwise be guilty of a violation of any
substantive provision of this Contract, then the non-defaulting Party, in the
event that the defaulting Party does not promptly initiate corrective action,
may, without prejudice to any other right or remedy and after giving the
defaulting Party and its surety, if any, ten (10) Days written notice, terminate
this Contract, and OWNER may finish the Work by whatever method it may deem
expedient. In case of such cancellation, the rights of the non-defaulting Party
shall be the same as if the defaulting Party had failed to perform this Contract
in whole or in part.
6.21 Taxes. Subject to Article 7, CONTRACTOR agrees to and does hereby accept
------
full and exclusive liability for the payment of, and agrees to indemnify and
hold harmless OWNER from claims, damage, loss and expenses arising from
CONTRACTOR'S failure to pay for unemployment insurance and/or retirement
benefit, pensions or annuities now or hereafter imposed by the Government of the
United States and/or by the Government of any state of the United States, which
are measured by the wages, salaries or other remunerations paid to persons
employed by CONTRACTOR on Work performed under the terms of this Contract.
CONTRACTOR assumes the liability of paying California Sales and Use Tax
to its suppliers or the appropriate taxing authorities for all its purchases of
permanent materials and fixtures, consumable supplies, small tools, construction
machinery, equipment rental used to perform the Contract and taxes on profits
(if any). CONTRACTOR's Lump Sum Price includes California Sales and Use Tax on
the CONTRACTOR's purchases of (a) self-constructed fixtures, (b) machinery and
equipment, and (c) permanent materials furnished under the Contract, if any.
Page 15 of 32
Any additions or reductions of charges to the OWNER will be lump sum
Change Orders and will be treated, for sales and use tax purposes, in the same
manner as under the original Contract.
All ad valorem taxes levied by any jurisdiction in San Bernardino
County, California on or charged against the real or personal property
constituting the materials to be incorporated into the Work are the
responsibility of OWNER. All ad valorem taxes levied on or charged against
personal property consumable supplies, tools, construction machinery and
equipment used to perform the Contract owned by CONTRACTOR, or its
subcontractors, are the responsibility of CONTRACTOR or its subcontractors,
respectively.
6.22 Subcontractor. CONTRACTOR shall not assign nor subcontract this Contract
--------------
or any part thereof or any interest therein without first obtaining the written
consent of OWNER. Such approval shall not be unreasonably withheld. CONTRACTOR
shall be fully responsible to OWNER for the acts and omissions of its
subcontractors and of persons either directly or indirectly employed by them as
it is for the acts and omissions of persons directly employed by it.
6.23 Federal Labor Compliance. Neither CONTRACTOR nor OWNER will unlawfully
-------------------------
discriminate against any employee or applicant for employment because of age,
race, color, religion, sex, or national origin and shall comply with all Federal
and California Laws.
CONTRACTOR will comply with all provisions of Executive Order 11246 of
September 24, 1965, and of the rules, regulations and relevant orders of the
Secretary of Labor.
6.24 Scheduling. A detailed Project Progress Schedule indicating the state of
-----------
Work is attached hereto as Section 4.1 of Exhibit A and hereby incorporated into
this Contract. Such Project Progress Schedule may be modified by the CONTRACTOR
from time to time to reflect changes in the Work or the conditions affecting the
Work. CONTRACTOR shall notify OWNER of such changes within five Days from the
time changes are known to CONTRACTOR. If these changes affect the cost or are
likely to change the date of Mechanical Completion the change must be first
approved in writing by OWNER's Representative and otherwise strictly comply with
the provisions for changes set forth in Section 6.13 above.
6.25 Report of Progress of the Work. CONTRACTOR agrees to furnish on the 10th
-------------------------------
Day of each month a progress report of engineering, procurement and
construction. This report shall state the actual Work completed as of the last
Sunday of the previous month.
6.26 OWNER'S Right To Inspect During Manufacture. OWNER shall have the right
--------------------------------------------
of ingress into any factory, shop, warehouse or other facility to inspect or
cause to be inspected during manufacture of any of the machinery or equipment,
at reasonable times and after prior notification to CONTRACTOR. No such
inspection shall relieve the CONTRACTOR of any obligation set forth herein. It
is understood that this paragraph does not impose any obligation upon OWNER.
Page 16 of 32
6.27 Warranty. CONTRACTOR warrants to OWNER that all the Work as set forth in
---------
this Contract will be free from defects in material and workmanship, has been
properly installed pursuant to this Contract and applicable manufacturer
specifications, and will otherwise comply with the specifications described in
this Contract. This Warranty shall extend for one (1) year from date of
Mechanical Completion. In addition, CONTRACTOR warrants to OWNER that:
6.27.1 The Work when completed will be free from defects in design that
would fall below the standard of care required of professional engineers;
6.27.2 The Work when completed will be free from defects in workmanship
and materials that would fall below a good and workmanlike standard;
6.27.3 Subject to Section 6.13, the Work will be designed and
constructed in compliance with all applicable laws, regulations and codes in
effect as of the effective date of the Contract;
6.27.4 All machinery, equipment, facilities, foundations (other than
any existing foundations at the Plant Site) and structures will be fabricated
and constructed in accordance with CONTRACTOR's designs using new materials,
unless otherwise agreed expressly in writing by OWNER, of good quality and using
construction and fabrication practices which are in accordance with good
industry practice.
6.27.5 The Operation and Maintenance Manuals to be delivered by the
CONTRACTOR in its Scope of Work under the Contract will give sufficient
information and instructions to OWNER for the repair, maintenance and operation
of CONTRACTOR's Work, including any information and instructions that have been
provided to CONTRACTOR by the OEM (the "Operation and Maintenance Manuals").
6.27.6 All equipment and supplies are installed in full compliance with
applicable OEM, OWNER, and Contract specifications.
6.28 Liability For Breach Of Warranty; Limit of Liability. If any failure to
------------------------------------------------------
comply with CONTRACTOR'S aforesaid warranty appears within the Warranty Period,
OWNER shall notify CONTRACTOR of such failure, and CONTRACTOR shall remedy any
such failure by correcting, repairing, or replacing (the parties to mutually
agree whether to correct, repair or replace) such machinery, equipment and/or
services within such time as shall be designated by OWNER. EXCEPT AS STATED IN
THIS CONTRACT AND EXCEPT AS TO TITLE, THERE ARE NO OTHER GUARANTEES OR
WARRANTIES, INCLUDING OF HABITABILITY, MERCHANTABILITY, FITNESS, PERFORMANCE OR
OTHERWISE, WHETHER ORAL, EXPRESS, IMPLIED, STATUTORY OR ARISING FROM COURSE OF
DEALING OR TRADE USAGE. CONTRACTOR'S obligations for warranty shall be
enforceable provided that OWNER maintains and operates the equipment under
normal conditions with competent personnel and in accordance with the Operations
and Maintenance Manuals provided by CONTRACTOR. CONTRACTOR does not warrant Work
from ordinary wear, corrosion, erosion, chemical or abrasive action, excessive
heat, improper lubricating oil or application outside the design limitation of
the Work. The obligations contained in Sections 6.27 and 6.28 govern and
supersede any other terms in this Contract which address warranties or the
quality of the Work after Mechanical Completion and are CONTRACTOR'S sole
warranty and guarantee obligations and OWNER'S exclusive remedies with respect
to defects in the Work after Mechanical Completion. All of the warranties and
other obligations of CONTRACTOR under Sections 6.27 and 6.28 relate to the
Warranty Period and CONTRACTOR shall not be obligated to correct, or to pay for
the cost of correcting, defects or deficiencies for which CONTRACTOR receives
notice after the expiration of the Warranty Period.
Page 17 of 32
CONTRACTOR shall obtain from all vendors from which CONTRACTOR procures
materials and equipment, warranties with respect to such equipment as are
reasonably available. Such warranties shall obligate the respective vendors to
repair or replace nonconforming or defective materials and equipment. All such
warranties shall be assigned to OWNER upon expiration of the CONTRACTOR's
Warranty Period. During the CONTRACTOR'S Warranty Period, CONTRACTOR shall
assume all responsibility at its expense for administering and enforcing such
vendor warranties and OWNER may rely upon and deal with CONTRACTOR with respect
to such warranties. The warranties specified in Section 6.27 above shall apply
to all portions of the Work provided by subsidiaries and vendors of CONTRACTOR
in addition to such portions provided by CONTRACTOR. Unless otherwise mutually
agreed by the parties, the refractory warranty period will be that which is
provided by the manufacturer.
6.29 Patents. Unless otherwise agreed in writing, and subject to Article 7,
--------
CONTRACTOR shall defend at its expense, indemnify Indemnitees (as defined in
Section 7.1.1), and pay cost and damages awarded in any suit brought against any
Indemnitee based on the use or sale of machinery, equipment and/or services
furnished hereunder constituting infringement of a validly existing United
States or foreign patent, copyright, trademark, trade secret or other
intellectual property right. OWNER may, at its option, participate in the
defense, compromise, or settlement of such claim provided that OWNER shall bear
the cost and expenses related to such participation. In the alternative,
CONTRACTOR, at CONTRACTOR'S sole option, may fulfill its obligations under this
Section 6.29 by procuring for OWNER, as appropriate, the right to make, use or
sell the invention or matter protected by the aforementioned infringed
intellectual property right, or by assisting OWNER in designing modifications
necessary to eliminate any claim of infringement. Any cost for such
modifications shall be CONTRACTOR'S responsibility.
OWNER shall defend at its expense, indemnify the Indemnified Parties (as defined
in Section 7.1.6), and pay cost and damages awarded in any suit based on alleged
infringement of a patent, copyright or trademark brought against any Indemnified
Party and based on the use or sale of machinery, equipment and/or services
falling outside the CONTRACTOR's Scope of Work, including, without limitation,
the OEM.
6.30 Intentionally Omitted.
----------------------
Page 18 of 32
6.31 CONTRACTOR'S Liability.
-----------------------
6.31.1 CONTRACTOR'S AGGREGATE MAXIMUM LIABILITY (EXCLUSIVE OF PROCEEDS
OF INSURANCE PROVIDED BY OWNER PURSUANT TO ARTICLE 7) FOR LOSS OR DAMAGE ARISING
UNDER, RESULTING FROM OR CONNECTED WITH THIS CONTRACT OR FROM THE PERFORMANCE OR
BREACH OF ANY OBLIGATION IMPOSED HEREUNDER, WHETHER SUCH LIABILITY ARISES FROM
BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), DELAYED COMPLETION, WARRANTY,
INDEMNITY, STRICT LIABILITY OR OTHERWISE, UNLESS OTHERWISE LIMITED BY THE TERMS
HEREOF, SHALL BE LIMITED TO TEN PERCENT (10%) OF THE TOTAL LUMP SUM CONTRACT
PRICE, WHETHER SUCH SUM IS EXPENDED IN REPAIR, REPLACEMENT, OTHER CORRECTIVE
ACTION, LIQUIDATED DAMAGES, IF ANY, OR DELAY DAMAGES, REFUND OF THE CONTRACT
PRICE OR ANY SUCH REMEDY AS MAY BE PROVIDED.
6.31.2 Except as it may be more narrowly limited by any other provision
of this Contract, the liability of CONTRACTOR, its subcontractors, vendors or
agents, or their employees, officers, directors and shareholders (collectively
referred to in this section as "CONTRACTOR") to OWNER, OWNER'S affiliates,
insurers, or their employees, officers, directors and shareholders, or any third
parties referred to below in Section 6.31.3 (collectively referred to in this
section as "OWNER") for loss of or damage to property (other than the Work)
shall be limited to: 1) the extent such loss or damage is caused by CONTRACTOR'S
negligence; and 2) the lesser of: (i) the deductible under OWNER'S insurance or
(ii) $250,000 in the aggregate.
6.31.3 OWNER represents that it is (i) the sole owner of the Work, the
land constituting the site of the OWNER'S plant and facilities where
CONTRACTOR'S Work will be performed, and any inventory or other personalty
stored thereon (collectively "Property"), or (ii) authorized to bind and does
bind (or will bind prior to the occurrence of any loss or damage thereto) all
persons or entities currently having, or acquiring in the future any legal or
equitable interest in or right to occupy the Property, to the indemnities,
releases and limitations of liability set forth in this Contract. If OWNER fails
to bind to this limitation any third party having, or hereafter acquiring, any
interest in the Property, OWNER agrees to indemnify, defend and hold CONTRACTOR
harmless from and against such liability to the extent that it would cause
CONTRACTOR'S total liability to exceed the limit of liability stated in Section
6.31.
6.31.4 This limitation of liability and indemnity applies to all
liability arising from the CONTRACTOR'S activities and obligations related to
the Contract, and any separate agreement with a third party to perform services
for OWNER'S benefit on OWNER'S Property, as defined above, including but not
limited to, duty arising in contract, warranty, indemnity, statute, tort or
other theory of liability (WHETHER SUCH OCCURRENCE ARISES OUT OF CONTRACTOR'S
SOLE OR CONCURRENT NEGLIGENCE OR BREACH OF ANY STANDARD OF STRICT LIABILITY).
6.31.5 CONTRACTOR'S liabilities are limited as set forth herein and it
is expressly agreed that this Contract sets forth the sole and exclusive
remedies available to OWNER. To the fullest extent permitted by law, neither
CONTRACTOR, its subcontractors or affiliates nor OWNER shall, under any
circumstances, be liable to the other for special, indirect, incidental,
punitive, exemplary, or consequential damages, including but not limited to loss
of use of Plant Site, Jobsite, Work, or other property, loss of savings, loss of
use of capital or goodwill, product or business interruption, increased cost of
capital, financing or other carrying charges, rental charges, or increased costs
of operations, maintenance of staffing needs, loss of profits, anticipated
revenue, interest, loss of use of equipment, loss by reason of plant shutdown,
non-operation, additional usage of fuel or utilities, or other such claim
arising from any cause whatsoever, whether or not foreseeable, and WHETHER OR
NOT SUCH LOSS OR DAMAGE IS BASED IN CONTRACT, WARRANTY, TORT (INCLUDING
NEGLIGENCE), STRICT LIABILITY, INDEMNITY, OR OTHERWISE, and each party hereby
releases the other party, and their respective agents and employees of each from
any and all such liability. Notwithstanding the foregoing, this Section shall
not be deemed to limit any indemnification obligation due from one party to the
other resulting from third party claims for bodily injury or death or for third
party claims for consequential damages relating to patent infringement to the
extent provided for elsewhere in this Contract, nor shall this Section be deemed
to limit CONTRACTOR's right to payment of the Lump Sum Contract Price to the
extent due pursuant to the terms hereof, as such amount may be amended by Change
Order.
Page 19 of 32
6.31.6 All disclaimers, limitations and exclusions of liability to
which CONTRACTOR is entitled under this Contract, including without limiting the
generality of the foregoing, limitations with respect to consequential damages,
liability and aggregate liability, warranty and other damages shall survive the
termination or completion of this Contract and shall inure to, and be available
as a defense by, the CONTRACTOR's affiliates, subsidiaries, subcontractors and
suppliers of any tier, and their respective officers, directors, shareholders,
agents and employees, and CONTRACTOR shall be deemed the agent of such persons
for the purpose of this section.
6.32 CONTRACTOR'S Insolvency. If CONTRACTOR is adjudged a bankrupt, or makes
------------------------
a general assignment for the benefit of its creditors, or if a receiver of
CONTRACTOR'S assets is appointed because of CONTRACTOR'S insolvency or inability
to pay its debts, or if OWNER otherwise has reasonable grounds to believe that
CONTRACTOR'S financial stability has become impaired, OWNER shall have the
option of terminating this Contract by giving written notice of termination to
CONTRACTOR, and such termination shall have the same effect as a termination
under Section 6.20 of this Contract.
6.33 Failure To Insist Upon Strict Performance. No failure by OWNER or
----------------------------------------------
CONTRACTOR to insist upon strict performance under this Contract in any
particular instance shall constitute a waiver of OWNER'S or CONTRACTOR's right,
as applicable, to insist upon strict performance in all other instances, whether
the same or different provisions of this Contract are involved.
6.34 Assignment. This Contract and all provisions thereof shall be binding
-----------
upon the respective successors and assigns of CONTRACTOR and OWNER, provided,
however, that neither party shall assign this Contract or any right or
obligation thereunder without first obtaining the written consent thereto of the
other party. Such consent shall not be unreasonably withheld.
6.35 Entire Agreement: Modification This Contract sets forth the entire
--------------------------------
agreement and understanding between the parties hereto with respect to the
subject matter hereof, and no attempted amendment or modification of this
Contract shall have any effect unless same is in writing and signed by the duly
authorized representatives of both parties hereto.
Page 20 of 32
6.36 Third Party Beneficiaries. The provisions of this Contract are intended
--------------------------
for the sole benefit of OWNER and CONTRACTOR and there are no third party
beneficiaries hereof except as provided in Section 6.31.
6.37 Severability. The invalidity or unenforceability of any portion or
-------------
provision of this Contract shall in no way affect the validity or enforceability
of any other portion or provision hereof. Any invalid or unenforceable portion
or provision shall be deemed severed from this Contract and the balance of the
Contract shall be construed and enforced as if the Contract did not contain such
invalid or unenforceable portion or provision. If any such provision of this
Contract is so declared invalid, the Parties shall promptly negotiate in good
faith new provisions to eliminate such invalidity and to restore this Contract
as near as possible to its original intent and effect.
6.38 No Fiduciary Duty. Nothing in this Contract shall be construed as
--------------------
creating a fiduciary duty between CONTRACTOR and OWNER, and the existence of any
such fiduciary duty between the Parties is hereby expressly disclaimed.
ARTICLE 7. INDEMNITIES AND INSURANCE
7.1 Indemnities
-----------
7.1.1 To the fullest extent permitted by law, CONTRACTOR shall
indemnify, defend (at OWNER'S request and through counsel reasonably acceptable
to OWNER) and hold harmless OWNER and its affiliates and their officers,
directors, employees and agents ("Indemnitee" in these Sections 7.1.1, 7.1.2 and
7.1.4) from and against all third party (a "third party" being a party not a
signatory to this Contract including employees of OWNER and CONTRACTOR) claims,
demands, causes of action, damages, liabilities, losses and expenses, including
attorneys' and consultants' fees and expenses (collectively, "Claims"), to the
extent arising out of or resulting from CONTRACTOR'S performance of Work,
provided such Claims are attributable to bodily injury, sickness or death, or
injury to or destruction of tangible property (except the Work).
7.1.2 The foregoing indemnity shall not extend to Claims to the extent
they result from the negligence, fault or willful misconduct of an Indemnitee.
7.1.3 With respect to Claims against any person or entity indemnified
by the CONTRACTOR, or subcontractor, or anyone directly or indirectly employed
by any of them or for whose acts any of them may be liable, the indemnification
obligation shall not be limited by a limitation on amount or type of damages,
compensation or benefits payable under workers' compensation acts, disability
benefit acts other employee benefit acts.
Page 21 of 32
7.1.4 Neither CONTRACTOR nor its subcontractors shall, as a result of
CONTRACTOR'S performance of the Work, place or release, or cause to be placed or
released, any Hazardous Materials (as defined in CERCLA) ("Hazardous Materials")
in, on or under the Jobsite, or into any adjacent or nearby watercourse, body of
water or wetlands, except in strict compliance with all applicable laws and
permits. CONTRACTOR shall be responsible for any Hazardous Materials that it or
its subcontractors or suppliers bring to the Jobsite, and for any Hazardous
Materials in CONTRACTOR's care that were provided to CONTRACTOR by OWNER or
OWNER's other contractors specifically for its use in performance of the Work,
which is deposited, released or disposed of in, on or under the Jobsite or into
any adjacent or nearby watercourse, body of water, or wetlands on or after the
date of execution of the Contract by any of the foregoing persons only,
including if necessary any cleanup or remediation activities, and shall
indemnify and hold harmless the Indemnitees from and against any Claims
(including under CERCLA) arising out of or resulting from the deposit, release
or disposal of any such Hazardous Materials in, on or under the Jobsite or into
any adjacent or nearby watercourse, body of water or wetlands on or after the
date of execution of the Contract by any of the CONTRACTOR, its subcontractors
or suppliers (excluding Indemnitees) only, except to the extent caused by
negligence or willful misconduct on the part of the applicable Indemnitee.
Provided, however OWNER agrees that if it provides CONTRACTOR with any Hazardous
Materials specifically for CONTRACTOR's use in performance of the Work, such
Hazardous Materials shall be identified on the packaging thereof or OWNER will
identify such Hazardous Materials in writing when provided, including any
applicable MSDS sheets.
7.1.5 CONTRACTOR may temporarily interrupt its Work and will promptly
inform OWNER if it reasonably believes there is undue risk of exposure to
Hazardous Substances. CONTRACTOR will cooperate with OWNER to determine when it
and others under its control may safely resume Work. If CONTRACTOR is not
responsible for, and did not cause the risk of exposure to, the Hazardous
Materials that caused the interruption in the Work, CONTRACTOR will be entitled
to a Change Order in accordance with Section 6.13, of the Lump Sum Contract
Price and Project Progress Schedule in connection with interruption of Work due
to Hazardous Substances.
7.1.6 OWNER shall be fully responsible for all Hazardous Substances
existing at the Jobsite as of the date of execution of the Contract. OWNER shall
indemnify, defend and hold harmless CONTRACTOR and its subcontractors, and their
officers, directors, employees and agents ("Indemnified Party" for this Section
7.1.6), from and against any Claims resulting from an encounter with or exposure
to Hazardous Materials or resulting from such Indemnified Party's being deemed
an owner or operator of the Jobsite, or a generator, storer, transporter or
treater of Hazardous Materials existing at the Jobsite as-of the date of
execution of the Contract, for purposes of any laws and permits relating to
Hazardous Materials or any investigatory or remedial actions by any government
authorities having jurisdiction over the Jobsite; provided, however that this
indemnity shall not apply to the extent of the sole negligence or willful
misconduct of an Indemnified Party or violation of applicable of laws or
regulations by an Indemnified Party. Without limitation, such indemnity shall
include any liability of the Indemnified Party under the Comprehensive
Environmental Response Compensation and Liability Act (including the SARA
amendments thereto), and any liability of the Indemnified Party resulting from
actions by any state or local agency.
Page 22 of 32
7.1.7 If any claim of Lien, stop notice, equitable lien or any other
demand for payment or security, including claims or demand upon surety bonds for
any of the Work, is made or filed with OWNER, OWNER'S property or the Jobsite by
any person claiming that CONTRACTOR, subcontractor, or any other person claiming
under any of them (other than OWNER) had failed to perform its contractual
obligations or to make payment for any obligation incurred for or in connection
with the Work, then OWNER, subject to OWNER having paid CONTRACTOR for such
amounts, shall have the right to retain from any payment then due or thereafter
to become due CONTRACTOR or to be reimbursed by CONTRACTOR an amount sufficient
to remedy any such nonpayment (including reasonably and actually incurred
attorneys' and consultants' fees) sustained or incurred in connection therewith.
Upon mutual agreement of the parties, CONTRACTOR may furnish a bond or other
security to indemnify OWNER against lien claims of subcontractors and
materialmen in order to receive payment from OWNER.
7.2 Insurance Provided by CONTRACTOR
--------------------------------
7.2.1 CONTRACTOR shall provide, pay for and maintain insurance of the
type and in the limits as set forth below. Such insurance shall be maintained
from the commencement of Work by CONTRACTOR on the Jobsite until the latter of
Mechanical Completion or the completion of all post-Mechanical Completion
warranty or related Work by CONTRACTOR or any subcontractor.
7.2.2 Automobile Liability insurance covering all owned, non-owned,
and hired vehicles used by CONTRACTOR or the applicable subcontractor for all
operations both on and off the Jobsite, with a limit of $3,000,000 combined
single limit per accident for Bodily Injury and Property Damage.
7.2.3 Workers' Compensation insurance for statutory benefits limits of
the applicable Labor Code(s) and Workers' Compensation law(s) and Coverage B -
Employer's Liability with limits of $1,000,000 each accident for Bodily Injury
by accident, $1,000,000 each employee for Bodily Injury by disease, and
$1,000,000 policy limit for Bodily Injury by disease. Such insurance shall be
endorsed to include Longshore and Harbor Workers' Compensation Act Coverage and
Jones Act Coverage if applicable, and shall cover all operations of CONTRACTOR.
Such insurance shall be endorsed to include Other States Coverage and to include
a Waiver of Our Right to Recover from Others Endorsement in favor of the
Indemnitees.
(a) If CONTRACTOR or the applicable subcontractor is a
qualified Workers' Compensation self-insurer, prior to
its commencement of Work at the Jobsite CONTRACTOR shall
submit to OWNER a copy of such employer's current
Certificate of Permission to Self- Insure.
(b) CONTRACTOR shall include, and shall require each of its
subcontractors to include, the following provision in
all subcontracts let by such party for performance of
Work when the party performing Work under such
subcontract is a qualified, approved self-insurer of
Workers' Compensation:
"The subcontractor waives any right of recovery
the subcontractor may have or acquire against the
Indemnitees, CONTRACTOR, or subcontractors of all tiers
by reason of the subcontractor's having paid Workers'
Compensation benefits as a self-insurer."
Page 23 of 32
7.2.4 Commercial General Liability insurance covering all operations
of CONTRACTOR and its subcontractors at the Jobsite. Such insurance shall be
written on an occurrence form; coverage under the primary policy cannot be
provided under a "Claims-Made" or "Modified Occurrence" policy without the
prior, express written consent of OWNER. Such insurance shall be no less
comprehensive and no more restrictive than the coverage provided by the standard
Insurance Services Office (ISO) form CG 00 01 10 93; shall include by its terms
or appropriate endorsements Bodily Injury, Property Damage, Personal Injury,
Blanket Contractual, Independent Contractors, Products and Completed Operations
coverages; shall include Products Liability coverage for any products
manufactured, assembled, or otherwise worked upon away from the Jobsite: and
shall include coverage for "x" (explosion), "c" (collapse), or "u" (underground)
exposures. Such insurance shall have the following limits:
$25,000,000 Each Occurrence;
$25,000,000 General Aggregate; and
$25,000,000 Products/Completed Operations Aggregate
7.2.5 Professional Liability insurance by the CONTRACTOR or applicable
subcontractor, if CONTRACTOR or applicable subcontractors will perform
professional services in connection with the Work, including engineering,
architectural, medical, testing, environmental assessment or remediation, or
design-build services, with a limit of $2,000,000 per wrongful act, or negligent
error or omission, and an annual aggregate limit of $4,000,000.
7.2.6 The insurance coverages specified in Sections 7.2.2, 7.2.3, and
7.2.4 may be arranged under single policies for the full limits required or by a
combination of underlying policies with the balance provided by Excess Liability
insurance. The Excess Liability insurance shall provide coverage substantially
following the form of and as broad as that of the underlying primary policies,
7.2.7 OWNER and its affiliates shall be included as Additional
Insureds under the insurance policy in Sections 7.2.2 (Auto) and 7.2.4 (CGL) and
such coverage afforded the Additional Insured in those Sections only shall be
primary insurance, to the extent of the limits provided in such sections. If any
Additional Insured has other insurance which is applicable to the loss, then to
the extent such Additional Insured is entitled to coverage under CONTRACTOR's
insurance pursuant to this paragraph, such other insurance shall be on an excess
and/or contingent basis.
7.2.8 All required coverages will be maintained without interruption
during the entire term of Contract plus the Commercial General Liability shall
remain in effect for an additional three (3) years in Products and Completed
Operations coverage following Mechanical Completion.
Page 24 of 32
7.2.9 CONTRACTOR will require its subcontractors to obtain and
maintain automobile liability, Workers' Compensation and Commercial General
Liability insurance, as applicable, in accordance with CONTRACTOR's standard
practices. CONTRACTOR will use all reasonable efforts to obtain for the benefit
of CONTRACTOR and OWNER waivers of subrogation and additional insured status
from its subcontractors.
7.3 Insurance Provided by OWNER
---------------------------
7.3.1 OWNER shall purchase and continuously maintain until Mechanical
Completion, or termination of this Contract, whichever occurs last, Builder's
Risk insurance naming as Named Insureds OWNER, CONTRACTOR, and subcontractors
and suppliers of all tiers and any other contractors of OWNER performing Work at
the Jobsite. Such insurance shall cover all equipment, machinery, supplies, and
other property intended to be permanently incorporated in the Work at Jobsite,
for which title or risk of loss shall have passed at the time of loss to an
insured. Coverage shall apply to such property while it is located at the
Jobsite or located at temporary off-site storage or staging areas approved by
OWNER, or while in land-based transit to the Jobsite within the continental
United States. Coverage shall be written on an "All Risk" form, including but
not limited to, fire, lightning, windstorm, hail, riot, riot attending a strike,
civil commotion, aircraft, vehicle, smoke, explosion, vandalism, malicious
mischief, damage to glass, theft, flood and earthquake (including sinkhole)
coverages. Such insurance shall include coverage for expenses due to delays in
completion as a result of the insured perils, subject to a thirty (30) Day
deductible. Limits under this insurance shall not be less than 100% of the
replacement value of the Work at Jobsite for physical damage to property and
related expenses, provided that sub limits shall be established for losses due
to earthquake (including sinkhole) and flood, which earthquake and flood
sublimits shall be no less than the minimum sublimits for such losses
established pursuant to OWNER'S agreements with its lenders. The OWNER if
requested, shall provide the CONTRACTOR with a copy of the proposed builder's
risk insurance policy for comments and a copy of the final policy and all
endorsements related thereto not less than thirty (30) Days prior to the first
Work on the Jobsite by CONTRACTOR,
7.3.2 The foregoing insurance shall include a deductible of not more
than $100,000 for each loss or such greater amount as is generally acceptable in
the industry for the size and scope of the Work. CONTRACTOR shall bear the first
$10,000 of the deductible amount (other than deductible amounts related to flood
or earthquake coverage, which OWNER shall be obliged to pay), with no increase
in the Lump Sum Contract Price.
7.3.3 Exclusions from such insurance may include, but are not limited
to, the following; (1) loss resulting from mysterious disappearance or caused by
any wrongful removal of any property of a named insured or any additional
insured by the employee(s) of such named insured or additional insured, (2) loss
or damage to any automobiles, (3) loss or damage to CONTRACTOR'S or any insured
subcontractor's owned, leased or rented property or construction-type tools,
equipment, machinery, or supplies used for construction but not intended to be
permanently incorporated in the Work at Jobsite, and (4) loss or damage covered
by a manufacturer's warranty or guarantee.
Page 25 of 32
7.3.4 Loss, if any, under this insurance shall be adjusted by OWNER,
with the cooperation of CONTRACTOR, and insurance proceed check(s) shall be made
payable to OWNER, to hold such funds as trustee on behalf of any party with an
insurable interest.
7.4 Requirements for All Insurance
------------------------------
CONTRACTOR shall cause the insurance to be obtained under Section 7.2,
and OWNER shall cause the insurance it obtains under Section 7.3, to satisfy the
following provisions and requirements.
7.4.1 Notwithstanding limitations of liability under Section 6.31,
OWNER and CONTRACTOR waive all rights against (i) each other and the
subcontractors, agents and employees of each other, and (ii) subcontractors,
agents and employees, for damage caused by fire or other peril to the extent
covered and paid by property insurance obtained by OWNER pursuant to this
Article 7 or by any other property insurance applicable to the Work, except such
rights as each may have to proceeds of such insurance held by OWNER as trustee.
The insurance policies obtained by OWNER pursuant to Section 7.3 shall be
endorsed to include a waiver of subrogation in favor of Indemnitees as well as
CONTRACTOR and its subcontractors, and the insurance policies obtained by
CONTRACTOR and its subcontractors pursuant to Section 7.2 shall be endorsed to
include a waiver of subrogation in favor of Indemnitees. In addition, to the
extent such policy(ies) to be provided by OWNER have a deductible greater than
$10,000, OWNER shall waive all rights of recovery against CONTRACTOR for events
covered by Section 6.14 for any such deductible losses in excess of CONTRACTOR's
$10,000 deductible.
7.4.2 All insurance required by this Contract shall be from insurance
companies authorized to transact that class of insurance in the State of
California or an approved not admitted carrier and having a minimum rating of
(or equivalent to) A-VIIl by A.M. Best & Company or as otherwise acceptable to
both CONTRACTOR and OWNER. The required certificates must be signed by the
authorized representative of the insurance company shown on the certificate with
proof that he/she is an authorized representative thereof. In addition,
certified, true and exact copies of all project-specific insurance policies
required by this Contract other than professional liability insurance shall be
provided to either party within a reasonable period of time upon written
request.
7.4.3 The insurance provided by OWNER hereunder shall provide primary
property damage coverage with respect to the Work.
7.4.4 Thirty (30) calendar Days' written notice shall be given to
OWNER and CONTRACTOR of any cancellation, intent not to renew, or reduction in
the policies' coverage except in the application of the aggregate limit
provisions.
7.4.5 Prior to commencing any Work at the Jobsite, CONTRACTOR shall
furnish OWNER with a certificate(s) of insurance giving evidence of insurance
required by Section 7.2 and evidence of additional insurance endorsements
required by Sections 7.2.7 and 7.4.1.
Page 26 of 32
Additionally, CONTRACTOR shall furnish a certificate(s) of insurance or
a policy binder(s) of insurance, evidencing replacement coverage, to OWNER at
least 7 Days prior to expiration of any such policies, so that there shall be no
interruption in Work due to lack of proof of insurance coverage required by this
Contract. If such documentation is not available 7 Days prior to expiration of
any such policy(s), CONTRACTOR shall provide OWNER with a notice, stating with
specificity the status of such renewal, and shall provide OWNER with a
certificate(s) of insurance or a policy binder(s) of insurance as soon as is
reasonably practicable. OWNER shall not be liable for any delays (or costs or
damages resulting there from) resulting from CONTRACTOR'S failure (or that of
any subcontractor of any tier) to obtain the insurance required of it under
Section 7.2, or to deliver the required certificates of insurance to OWNER.
Certificates of insurance shall provide for at least thirty (30) Days'
prior written notice to OWNER of cancellation (unless cancellation is for
nonpayment of premium, in which case 10 Days' notice will suffice) or materials
alteration, and shall delete the words "endeavor to" from the obligation to
notify the certificate holder (OWNER) of such cancellation or modification. Upon
advance written request of OWNER, CONTRACTOR shall permit OWNER to review, at
CONTRACTOR'S office, a copy of any policy of insurance required by Section 7.2,
from which may be redacted premium information.
7.4.6 The insurance coverages and limits required under this Contract
are designed to meet the minimum requirements of OWNER. They are not designed as
a recommended insurance program for CONTRACTOR or its subcontractors, and
meeting these minimum requirements does not relieve such persons of their
obligations under Section 7.1.
7.4.7 The amounts and types of Commercial General Liability insurance
shall conform to the minimum requirements set forth in this Article 7, utilizing
insurance Services Office (ISO) policies or the equivalent and endorsements
where applicable.
7.4.8 The acceptance of delivery of any certificates of insurance or
certified insurance policies required to be purchased and maintained pursuant to
this Contract does not constitute approval or agreement by the recipient that
the insurance requirements have been met or that those certificates of insurance
policies are in compliance with this Contract.
7.4.9 All of the insurance required by this Article 7 shall be issued
as required by law and shall be endorsed, where necessary, to comply with the
minimum requirements contained herein. Certificates of insurance, or other
reasonably available evidence of insurance coverage as specified in Section
7.4.5 above, must be provided at least 7 Days prior to expiration of current
policies so that there shall be no interruption in Work due to lack of proof of
insurance coverage as required in this Contract.
7.4.10 OWNER may elect at any time during the term of this Contract to
require CONTRACTOR to procure and maintain other or additional commercially
available insurance. Notice of such election shall be given at least sixty (60)
Days prior to the effective date of the required modifications, Any additional
costs incurred by these parties in securing insurance shall be reimbursed by
OWNER as a part of the cost of the Work, and the Lump Sum Contract Price shall
be revised by Change Order to be increased by the amount of such additional
reimbursement.
Page 27 of 32
ARTICLE 8. RESOLUTION OF DISPUTES
If at any time any controversy shall arise between OWNER and CONTRACTOR
with respect to any matter or thing involved in this Contract, or arising out of
or related to subject matter of this Contract, and which OWNER and CONTRACTOR do
not promptly adjust and determine, and upon completion of the Work and before
the final settlement and payment is made said controversy shall be resolved
first by a meeting between the Project Management Committee of the respective
parties involved. Should agreement still not be reached within ten (10) Days,
said controversy shall be resolved by a meeting between the chief executive
officers of the respective parties involved. Should agreement still not be
reached within twenty-four (24) hours, the parties may agree to mediate. If they
do not agree to mediate, or if mediation is unsuccessful, the parties agree to
be subject to binding arbitration in accordance with the most current Rules for
Construction Disputes of the American Arbitration Association (AAA). If the Work
or any part of the Work is being delayed, the arbitration must result in an
interim ruling within ninety (90) Days of submission. The award shall be in
writing and shall include findings of fact and conclusions of law in support of
the award. The award will be final and binding and may be entered in any court
of competent jurisdiction. All disputes and/or claims less than or equal to One
Hundred Thousand Dollars ($100,000.00) in value shall be before a single
arbitrator and disputes and/or claims in excess of that amount shall be before a
panel of three arbitrators, all appointed in accordance with said Rules. The
parties shall split evenly the costs of all arbitrators' fees, and all costs
assessed by the AAA. Each party shall bear its own cost of arbitration. The
arbitration shall take place in Dallas, Texas and Texas law shall apply. The
arbitrator(s) shall have no authority to award relief that is precluded by the
terms of this Contract. CONTRACTOR shall require its subcontractors to agree in
writing to submit to the jurisdiction of arbitration.
ARTICLE 9. INDEPENDENT CONTRACTOR
CONTRACTOR is engaged by OWNER under this Contract to provide the Work
solely as an independent contractor. CONTRACTOR and CONTRACTOR'S employees and
subcontractors shall not have or be deemed to have employee status with OWNER or
any affiliated companies by virtue of this Contract or otherwise, nor shall
CONTRACTOR be or become entitled to participate in any plans, benefits,
arrangements or distributions which OWNER and any affiliated corporations now or
hereafter make available to their employees.
ARTICLE 10. NOTICE
All communications and notices provided for or required under this
Contract shall be in writing and mailed by U.S. Mail, first class or certified
return receipt request, or delivered in person or by confirmed telecopy
facsimile with original sent by mail, to the respective addresses of OWNER and
CONTRACTOR set forth in this Contract. Notices shall be properly delivered to
the appropriate party at such party's address as set forth below or as set forth
in a notice hereafter sent in this manner:
Page 28 of 32
OWNER: CONTRACTOR:
Riverside Cement Company Oro Grande Contractors
3500 Porsche Way Suit 150 P.O. Box 240130 (78224-0130)
P.O. Box 51479 527 Logwood (78221-1738)
Ontario, Ca. 91761-0079 San Antonio, Texas
Attention: William O. Brown Attention:Stephen H. Dedman
ARTICLE 11. SPECIAL CONDITIONS
The special conditions of this Contract are as follows:
1. OWNER shall furnish a "Daily Drilling Log" form to the
CONTRACTOR to summarize the daily activity of each drilling rig on this form.
The completed form in duplicate and authenticated by signatures of CONTRACTOR'S
representative and OWNER shall be given to OWNER at the end of each work day in
which drilling occurred.
2. Prior to commencing Work, CONTRACTOR shall furnish OWNER with
written verification of a CONTRACTOR IDENTIFICATION NUMBER obtained from MSHA.
3. CONTRACTOR shall advise and OWNER must approve the origins of
all equipment and fabricated items supplied under this Contract provided,
however, that such approval will be given in a timely basis and will not be
unreasonably withheld.
4. Vendors are identified in the Owner-approved Vendor Preference
List, and CONTRACTOR may select any Vendor included in this List for auxiliary
equipment.
ARTICLE 12. THE CONTRACT DOCUMENTS.
12.1 This Contract includes all changes and addenda to date and
constitutes the entire understanding of the parties and supersedes any prior
proposals, understandings, correspondence and/or agreements. CONTRACTOR may not
assign or attempt to assign any funds accrued or to accrue under this Contract
without first obtaining the written consent of OWNER and no such assignment
shall be binding on OWNER unless and until accepted in writing by OWNER. Waiver
of any breach hereof shall not constitute a waiver of any subsequent breach of
the same or any other provision hereof.
12.2 In the event of conflicts among the terms of the Contract
Documents, interpretations shall be based upon the following Contract Documents
which are set forth in ranked order of precedence:
(a) Amendments, addenda or other modifications to the Contract
Documents (including Change Orders) duly signed and issued after the signing of
this Contract, with those of a later date having precedence over those of an
earlier date;
(b) Articles 1 through 14 of this Contract;
Page 29 of 32
(c) Exhibit A to the Contract in the following order of precedence:
o 2.4, Basis of Price
o 2.3, Division of Responsibility
o 1.0, Scope of Work
o 2.1, Design Criteria
o 2.2, Drawing and Specification List
o 3.0, Estimated Cost of Project
o 4.0, Project Execution Plan; and
(d) Exhibit B.
ARTICLE 13. GOVERNING LAW
- -------------------------
The Contract Documents, and the rights and obligations of the parties
under or pursuant to the Contract Documents, shall be governed and construed
according to the laws of the State of Texas without regard to the conflicts of
laws provisions of that State.
ARTICLE 14. DEFINITIONS
- -------------------------
"Change Order" means a change requested either by OWNER or by CONTRACTOR, which
has been executed and approved by OWNER in writing as more completely set forth
in Section 6.13 of the Contract.
"Claims" has the meaning set forth in Section 7.1.1.
"Contract" or "Contract Documents" has the meaning set forth in Section 1.1.
"CONTRACTOR" means Oro Grande Contractors, a Joint Venture between Zachry
Construction Corporation and AMEC E&C Services, Inc.
"Day" or "Days" shall mean calendar days.
"Drawings and Specifications" means (i) all specifications, calculations,
design, plans, drawings, engineering and analyses, and other documents which
determine, establish, define or otherwise describe the scope, quantity, and
relationship of the components of the Project, and (ii) all technical drawings,
operating drawings, specifications, shop drawings, diagrams, illustrations,
schedules and performance charts, calculations, samples, patterns, models,
operation and maintenance manuals, piping and instrumentation diagrams,
underground structure drawings, conduit and grounding drawings, lighting
drawings, conduit and cable drawings, electric one-line's, electric schematics,
connection diagrams and technical information of a like nature, in the form
attached to this Contract or incorporated into this Contract by reference.
Specifications and instructions provided by an OEM regarding the proper
installation, startup or initial operation of OEM equipment shall be deemed to
be a part of the Drawings and Specifications to the extent provided to
CONTRACTOR by the OEM or OWNER.
"Dry Run Tested" or "Dry Run Testing" means testing of the Work under power but
without process controls and prior to introduction of process material.
"Final Acceptance" shall have the meaning set forth in Article 5 hereof. Final
Acceptance is intended to occur only with respect to the entirety of the Work,
and will not be deemed to occur with respect to portions of the Work if the
balance of the Work is not complete.
Page 30 of 32
"Force Majeure" shall mean an occurrence that is unexpected and not reasonably
foreseeable on the effective date of this Contract, and beyond the control of
the party affected, not otherwise dealt with by the provisions of this Contract,
which by exercise of reasonable diligence could not be prevented or provided
against, such as acts of God, unusual or extremely severe weather, tornado,
flood, fire, earthquake, strikes (other than those of CONTRACTOR and its
Subcontractors at the Jobsite), threats of or acts of terrorism, riot or civil
unrest, or other acts of workers of the other party which are not permitted by
this Contract, or delays in transportation for which no reasonable alternative
is or was available, or delay in work of subcontractors caused by events of
Force Majeure ("Force Majeure").
"Hazardous Materials" has the meaning set forth in Section 7.1.4.
"Indemnified Party" has the meaning set forth in Section 7.1.6.
"Indemnitee" has the meaning set forth in Section 7.1.1.
"Jobsite" means the actual area specified by OWNER at the Plant Site where the
Work is to be delivered and performed by the CONTRACTOR.
"Limited Notice to Proceed" or "LNTP" means a written notice given by OWNER to
CONTRACTOR directing CONTRACTOR to commence a limited portion of the Work.
"Lump Sum Contract Price" has the meaning set forth in Article 3.
"Mechanical Completion" means OWNER will issue the Certificate of Mechanical
Completion when all systems and equipment have been turned over and all critical
punch list work has been completed. At this point the project is defined to be
Mechanically Complete.
"Notice to Proceed" means the written notice given by OWNER to CONTRACTOR
directing CONTRACTOR to commence performance of the entire Work.
"OEM" means only Polysius. With respect to references to drawings and
specifications provided by an OEM for use by CONTRACTOR, such drawings and
specifications shall include any documentation provided by a manufacturer or
distributor of equipment regarding the proper installation, startup, and initial
operation of such equipment.
"OEM Equipment" means the Equipment provided by Polysius.
"OEM Services" means services supplied by Polysius
"OWNER" means Riverside Cement Company, a California general partnership.
"OWNER's Representative" means the OWNER's executive, who will manage the
Project on behalf of and represent the OWNER and who shall be William O. Brown
unless otherwise designated in writing by OWNER.
"OWNER-Supplied Equipment" means equipment provided by OWNER or OWNER's
suppliers.
"Plant Site" means the Oro Grande Cement Plant, as described in
Article 1.
"Project Progress Schedule" means the schedule for completion of the Work, which
is set forth in Section 4.1 of Exhibit A.
"Schedule of Values for Progress Payments" as set forth in Section 3.2 of
Exhibit A.
Page 31 of 32
"Substantial Completion" - Completion of Work on a piece of equipment is
indicated with the hanging of green and manila tags. The green tag indicates the
field cables have been point-to-point wire checked and the insulation resistance
tested. The manila tag indicates the mechanical equipment has been completely
assembled, lubricated, aligned, rotated by hand, and is otherwise ready to be
placed in service. Testing of the process equipment begins with energizing and
verifying the local control circuits. The motors will then be bumped to verify
proper rotation, coupled, and final alignment verified. Suitable equipment (not
including the Raw Mill, Coal Mill, Finish Mill, Kiln, Clinker Cooler) will then
be run locally without load for two continuous hours to verify proper operation
(dry run). With operation of the equipment verified and accepted by OWNER; care,
custody, and control of the equipment is transferred to OWNER. OWNER will issue
a Certificate of Substantial Completion for the area when all equipment in an
area has been similarly tested.
"Warranty Period" has the meaning set forth in Section 6.16.
"Work" or "Scope of Work" has the meaning set forth in Article 1.
IN WITNESS WHEREOF the parties have executed this Contract the day and year
first above written,
Riverside Cement Company, Oro Grande Contractors,
a California general partnership a Joint Venture
Zachry Construction Corporation
By: /s/ MEL G. BREKHUS By: /s/ STEPHEN H. DEDMAN
--------------------------- --------------------------------
Name: Mel G. Brekhus Name: Stephen H. Dedman
Title: General Manager and Title: Vice President
Chief Executive Officer
AMEC E&C Services, Inc.
By: /s/ TIM WATSON
--------------------------------
Name: Tim Watson
Title: Vice President