EXHIBIT 10.2
EXECUTION VERSION
This PHASE 2 DESIGN-BUILD AGREEMENT is made the 2nd day of November in the year
2005 (as amended, amended and restated, supplemented or otherwise modified from
time to time, this "Agreement"), is entered into by and between PACIFIC ETHANOL
MADERA LLC, a limited liability company organized under the laws of the State of
Delaware and having an address at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the
"Owner") and ▇.▇. ▇▇▇▇▇ CO., a corporation organized under the laws of the State
of California and having an address at ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇-▇▇▇▇
(the "Design-Builder") and is for services in connection with the construction
of the ethanol production facility at the Madera, California site. Notice to the
parties shall be given at the above addresses.
ARTICLE 1 -RECITALS; AGREEMENT
WHEREAS, the Owner and the Design-Builder are parties to that certain
Amended and Restated Design-Build Agreement of even date herewith (as amended,
supplemented or otherwise modified from time to time, the "PHASE I DESIGN-BUILD
AGREEMENT"), a copy of which is attached hereto as Exhibit E; and
WHEREAS, the Owner desires the Design-Builder to complete the
development and construction of the Project.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises and covenants herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Owner and the Design-Builder hereby agree as follows:
ARTICLE 2 - GENERAL PROVISIONS
2.1 TEAM RELATIONSHIP The Owner and the Design-Builder agree to proceed with the
Project on the basis of trust, good faith and fair dealing and shall take all
actions reasonably necessary to perform this Agreement in an economical and
timely manner, including consideration of design modifications and alternative
materials or equipment that will permit the Work to be constructed within the
Guaranteed Maximum Price (GMP) and by the Dates of Substantial Construction
Completion and Final Construction Completion as established herein. The
Design-Builder agrees to furnish, as permitted by the law of the state where the
project is located, the construction phase services as set forth below.
2.1.1 The Design-Builder represents that it is an independent contractor and
that it is familiar with the type of work it is undertaking.
2.1.2 Neither the Design-Builder nor any of its agents or employees shall act
on behalf of or in the name of the Owner unless authorized in writing by the
Owner's Representative.
2.2 ENGINEER Engineering services shall be procured from licensed, independent
design professionals retained by the Design-Builder with consultation from Owner
as permitted by the law of the state where the Project is located. The standard
of care for engineering services performed under this Agreement shall be the
care and skill ordinarily used by members of the engineering professions
practicing under similar conditions at the same time and locality. The entity
providing engineering services shall be referred to as the Engineer and provide
separate and exclusive Professional Liability Insurance as required. The
engineering services shall be procured pursuant to a separate agreement between
the Design-Builder and the Engineer.
2.2.1 THE Engineer for the Project shall be DELTA-T CORPORATION.
2.3 EXTENT OF AGREEMENT This Agreement is solely for the benefit of the parties,
represents the entire and integrated agreement between the parties, and
supersedes all prior negotiations, representations or agreements, either written
or oral. The Owner and the Design-Builder agree to look solely to each other
with respect to the performance of the Agreement. The Agreement and each and
every provision are for the exclusive benefit of the Owner and the
Design-Builder and not for the benefit of any third party or any third party
beneficiary, except to the extent expressly provided in the Agreement.
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2.4 DEFINITIONS
.1 APPLICABLE PERMITS shall MEAN ANY and all permits, clearances,
licenses, authorizations, consents, filings, exemptions or approvals
from or required by any government authority that are necessary for the
performance of the Work.
.2 BUSINESS Day shall mean any day other than a Saturday, Sunday or a
day on which commercial banks in Fresno, California or New York, New
York are required or authorized to be closed.
.3 THE CONTRACT DOCUMENTS consist of:
a. Change Orders and written amendments to this Agreement
including exhibits and appendices, signed by both the Owner
and the Design-Builder;
b. this Agreement except for the existing Contract Documents
set forth in item e. below;
c. the most current documents approved by the Owner pursuant
to Paragraph 3.1;
d. the information provided by the Owner pursuant to Clause
4.1.2.1;
e. the Contract Documents in existence at the time of
execution of this Agreement which are set forth in Article 15.
Additional Exhibits may be added to this document with proper
signature of the Owner and Design-Builder;
f. the Owner's Program provided pursuant to Subparagraph 4.1.
In case of any inconsistency, conflict or ambiguity among the Contract
Documents, the documents shall govern in the order in which they are
listed above.
.4 THE TERM DAY shall mean calendar day, unless otherwise specifically
defined.
.5 DEFECTIVE WORK is any portion of the Work not in conformance with
the Contract Documents as more fully described in Paragraph 3.8.
.6 DESIGN-BUILDER PERMITS shall mean the Applicable Permits listed on
Exhibit J.
.7 DESIGN-BUILDER'S FEE means the compensation paid to the
Design-Builder for salaries and other mandatory or customary
compensation of the Design-Builder's employees at its principle and
branch offices except employees listed in Subparagraph 8.2.2, general
and administrative expenses of the Design-Builder's principal and
branch offices other than the field office, and the Design-Builder's
capital expenses, including interest on the Design-Builder's capital
employed for the Work, and profit.
.8 DESIGN-BUILDER'S SHARED SAVINGS shall mean to reference the
Design-Builder's shared savings program established pursuant to Article
3.2.6.
.9 DRAWINGS shall mean (a) all specifications, calculations, designs,
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, including the
structure and foundation thereof, and (b) 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,
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electric one-line's, electric schematics, connection diagrams and
technical information of a like nature, prepared by the Design-Builder
or any of its Subcontractors or vendors and required to be submitted by
the Design-Builder, or any Subcontractor or vendor, from time to time
under the Contract Documents which illustrates any of the equipment or
any other portion of the Work, either in components or as completed.
.10 The term FAST-TRACK means accelerated scheduling which involves
commencing construction prior to the completion of drawings and
specifications and then using means such as bid packages and efficient
coordination to compress the overall schedule.
.11 FINAL CONSTRUCTION COMPLETION shall be a maximum of five hundred
forty-five (545) calendar days after the Notice to Proceed conforming
to Article 9 of this Agreement and shall indicate to the Owner that the
Plant is ready for operation by the Owner and the following activities
have occurred:
a. Substantial Construction Completion has been achieved.
b. The Performance Test as outlined in Exhibits G and H has
been completed and the Performance Guarantees have been
satisfied or the Design-Builder shall have paid all Liquidated
Damages owing to the Owner under this Agreement.
c. Written punch list items have been completed.
d. Any and all Liens in respect to the Project, the Contract
Documents, the equipment, or any fixtures, personal property
or equipment included in the Work created by, through or
under, or as a result of any act or omission of, the
Design-Builder or any Subcontractor, vendor or other person
providing labor or materials in connection with the Work shall
have been released or bonded in form satisfactory to the Owner
(provided that the Design-Builder's Final Payment
Unconditional Lien Waiver, in substantially the form of
Exhibit L-3 attached hereto, shall be given concurrently in
connection with the Final Payment made pursuant to Section
10.5).
.12 FINAL PLANS shall mean all Drawings and final specifications, as
revised to reflect the changes during construction, and shall include
as-built drawings, piping and instrumentation diagrams, underground
structure drawings (including buried piping, all utilities, and
critical hidden items), electric one-lines, electric schematics and
connection diagrams.
.13 FINANCING PARTIES shall mean the lenders, security holders,
investors, export credit agencies, multilateral institutions, equity
providers and others providing financing or refinancing to or on behalf
of the Owner or an affiliate thereof, for the development,
construction, ownership, operation and maintenance of the Project or
any portion thereof, or any trustee or agent acting on behalf of any of
the foregoing.
.14 HAZARDOUS MATERIALS shall mean any hazardous materials, hazardous
waste, hazardous constituents, hazardous or toxic or radioactive
substances or petroleum products (including crude oil or any fraction
thereof), defined or regulated as such under any applicable laws.
.15 LIEN shall mean any lien, security interest, mortgage,
hypothecation, encumbrance or other restriction on title or property
interest.
.16 A MATERIAL SUPPLIER is a party or entity retained by the
Design-Builder to provide material and equipment for the Work.
.17 NOTICE TO PROCEED shall be the unconditional contractual start of
the Work under this Agreement as indicated in writing by the Owner and
shall occur no sooner than November 21, 2005.
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.18 OTHERS means other contractors and all persons at the Worksite who
are not employed by Design-Builder, its Subcontractors or Material
Suppliers.
.19 The OWNER is the person or entity identified as such in this
Agreement and includes the Owner's Representative.
.20 OWNER-CAUSED DELAY shall mean a material delay in the
Design-Builder's performance of any construction, design or equipment
milestone which is demonstrably caused solely by the Owner's failure to
perform any covenant of the Owner hereunder (other than by exercise of
rights under this Agreement, including the exercise by the Owner of the
right to have defective or nonconforming Work corrected or
re-executed). The Design-Builder expressly acknowledges and agrees that
any delay that is due in part to the Design-Builder's action or
inaction is not an the Owner-Caused Delay.
.21 OWNER PERMITS shall mean the Applicable Permits listed on Exhibit
K.
.22 The OWNER'S PROGRAM is an initial description of the Owner's
objectives, that may include budget and time criteria, space
requirements and relationships, flexibility and expandability
requirements, special equipment and systems, and site requirements
completed by the Design-Builder and Engineer as described in Exhibit C;
Project Development Agreement.
.23 PRE-EXISTING HAZARDOUS MATERIALS shall mean Hazardous Materials
that existed on or in the Worksite prior to initial mobilization by the
Design-Builder.
.24 The PROJECT is the building, facility and/or other improvements for
which the Design-Builder is to perform the Work under this Agreement.
It may also include improvements to be undertaken by the Owner or
Others.
.25 A SUBCONTRACTOR is (a) a party or entity retained by the
Design-Builder as an independent contractor to provide the on-site
labor, materials, equipment and/or services necessary to complete a
specific portion of the Work or (b) for the purposes of this definition
only, any licensed engineer providing services in connection with the
Work. The term Subcontractor does not include any separate contractor
employed by the Owner or any separate contractor's subcontractors.
.26 SUBSTANTIAL CONSTRUCTION COMPLETION shall be four hundred
twenty-five (425) calendar days after the Notice to Proceed conforming
to Article 9 of this Agreement and shall indicate to the Owner when the
Plant is ready for Startup and the following activities have occurred:
a. TRAINING: Owner employees/operators have been provided the
training as contractually required.
b. MANUALS AND PLANS: The final operations and maintenance
(O&M) manuals and all Final Plans have been delivered to the
Owner.
c. MECHANICAL COMPLETION: Construction activities essential to
the safe and proper operation of the Plant have been
completed, as more fully detailed in the Schedule of Work
agreed upon by the Owner, Design Builder and Engineer. This
includes the site, building, mechanical equipment, piping,
electrical and instrumentation components of the Plant.
d. COMMISSIONING: Tasks required to take the Plant from
Mechanical Completion to Ready for Startup have been
completed, as more fully detailed in an activity list agreed
upon by the Owner, Design Builder and Engineer. These tasks
include the checking and preparation of the Plant for
operation; checking of functional control loop, interlock
testing, system purging and utility system start-ups.
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e. PUNCH LIST The punch list shall have been agreed between
the Design-Builder and the Owner.
f. READY FOR STARTUP: The activities required for Mechanical
Completion and Commissioning have occurred and the Plant is
ready to process grain at the hammer ▇▇▇▇▇ in the manner
contemplated by this Agreement.
g. PERFORMANCE TEST The Design-Builder shall have initiated
the Performance Test as outlined in Exhibits G and H and, in
connection with such Performance Test, the Design-Builder
shall have demonstrated that the Plant achieves 95% of its
Performance Guarantee.
.27 A SUB-SUBCONTRACTOR is a party or entity who has an agreement with
a Subcontractor to perform any portion of the Subcontractor's work.
.28 The WORK shall mean the GMP Proposal previously accepted by Owner
in accordance with Paragraph 3.2, the Construction Phase Services
provided in accordance with Paragraph 3.3, Additional Services that may
be provided in accordance with Paragraph 3.10, and other services which
are necessary to complete the Project in accordance with and reasonably
inferable from the Contract Documents.
.29 WORKSITE means the geographical area at the location mentioned in
Article where the Work is to be performed.
ARTICLE 3 -DESIGN-BUILDER'S RESPONSIBILITIES
3.1 RESPONSIBILITIES The Design-Builder shall be responsible for procuring the
design and for furnishing the construction of the Work consistent with the
Owner's Program; as such the Owner may modify the Program during the course of
the work up to twenty-five (25)-percent design complete. The Design-Builder
shall exercise reasonable skill and judgment in the performance of its services
consistent with the team relationship described in Paragraph 2.1, but does not
warrant nor guarantee schedules and estimates other than those that are part of
the GMP Proposal.
3.1.1 ACCEPTANCE By its execution and delivery of this Agreement, the
Design-Builder hereby accepts the work performed by the Design-Builder or the
Engineer under the Phase I Design-Build Agreement The Design-Builder further
agrees that it shall not (a) make any claim for damages or seek any adjustment
to the GMP, the Design-Builder's Fee or the Dates of Substantial Construction
Completion and/or Final Construction Completion or (b) raise any defense to, or
seek any excuse for, performance of its obligations and responsibility for its
liabilities under this Agreement, based upon, in any part, the Design-Builder's
or Engineer's work completed or not completed pursuant to the Phase 1
Design-Build Agreement (it being acknowledged and agreed that nothing in this
Section 3.1.1 shall limit the Design-Builder's rights and obligations under
Section 11.10 of this Agreement).
3.1.2 OWNERSHIP OF DOCUMENTS Upon the making of payment pursuant to Paragraph
10.5, the Owner shall receive ownership of the property rights, except for
copyrights and other limited license information provided and required by the
Engineer, of all documents, drawings, specifications, electronic data and
information prepared, provided or procured by the Design-Builder, its Engineer,
Subcontractors and consultants and distributed to the Owner for this Project.
("Design-Build Documents")
.1 If this Agreement is terminated pursuant to Paragraph 12.1, the
Owner shall receive ownership of the property rights, except for
copyrights and other limited license information provide by the
Engineer, of the Design-Build Documents upon payment for all Work
performed in accordance with this Agreement, at which time the Owner
shall have the right to use, reproduce and make derivative works from
the Design-Build Documents to complete the Work.
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.2 If this Agreement is terminated pursuant to Paragraph 12.2, the
Owner shall receive ownership of the property rights, except for
copyrights and other limited license information provide by the
Engineer, of the Design-Build Documents upon payment of all sums
provided in Paragraph 12.2, at which time the Owner shall have the
right to use, reproduce and make derivative works from the Design-Build
Documents to complete the Work.
.3 The Owner may use, reproduce and make derivative works from the
Design-Build Documents for subsequent renovation and remodeling of the
Work, but shall not use, reproduce or make derivative works from the
Design-Build Documents for other projects without the written
authorization of the Design-Builder and Engineer, who shall not
unreasonably withhold consent.
.4 The Owner's use of the Design-Build Documents without the
Design-Builder's involvement or on other projects is at the Owner's
sole risk, except for the Design-Builder's indemnification obligation
pursuant to Paragraph 3.7, and the Owner shall defend, indemnify and
hold harmless the Design-Builder, its Engineer, Subcontractors and
consultants, and the agents, officers, directors and employees of each
of them from and against any and all claims, damages, losses, costs and
expenses, including but not limited to attorney's fees, costs and
expenses incurred in connection with any dispute resolution process,
arising out of or resulting from the Owner's use of the Design-Build
Documents.
.5 The Design-Builder shall obtain from its Engineer, Subcontractors
and consultants property rights and rights of use that correspond to
the rights given by the Design-Builder to the Owner in this Agreement.
3.2 GUARANTEED MAXIMUM PRICE (GMP)
3.2.1 GMP PROPOSAL The Owner and the Design-Builder agree that the
Design-Builder's GMP Proposal previously submitted to the Owner has been
accepted by the Owner. The GMP is subject to modification as provided in Article
9 and is based on the scope of services listed in Exhibit D.
3.2.1.1 PURSUANT TO THE PAYMENT TERMS AND CONDITIONS HEREIN, THE OWNER
SHALL PAY FOR ALL COSTS ASSOCIATED WITH THE ABOVE SCOPE OF WORK FOR THE
GUARANTEED MAXIMUM PRICE (GMP) OF $33,750,000.
3.2.1.2 The Design-Builder has provided in the GMP for further
development of the Design-Build Documents consistent with the Owner's
Program. Such further development does not include changes in scope,
systems, kinds and quality of materials, finishes or equipment, all of
which if required, shall be incorporated by Change Order.
3.2.2 BASIS OF GUARANTEED MAXIMUM PRICE A written statement of the scope of work
and the basis of the GMP Proposal are set forth in Exhibit D, which includes:
.1 the drawings and specifications prepared prior to April 15, 2005,
including all addenda, which were used in preparation of the GMP
Proposal;
.2 a list of the assumptions and clarifications made by the
Design-Builder in the preparation of the GMP Proposal to supplement the
information contained in the drawings and specifications;
.3 a schedule of applicable alternate prices, unit prices and time and
material prices if necessary;
.4 Additional Services if any;
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.5 a statement of any work to be self-performed by the Design-Builder;
and
.6 a statement identifying all patented or copyrighted materials,
methods or systems selected by the Design-Builder and incorporated in
the Work that are likely to require the payment of royalties or license
fees.
3.2.3 [RESERVED.]
3.2.4 [RESERVED.]
3.2.5 [RESERVED.]
3.2.6 DESIGN-BUILDER'S SHARED SAVINGS The GMP Proposal contains, as part of the
estimated Cost of the Work, a Design-Builder's shared savings provision with the
Owner for use at the Design-Builder's discretion to cover costs which are
properly reimbursable as the Cost of the Work but are not the basis for a Change
Order. Any shared savings between the Owner and Design-Builder shall be on a
fifty-fifty (50/50) basis between GMP and the Time and Material (T&M) ▇▇▇▇▇▇▇▇,
assuming the T&M ▇▇▇▇▇▇▇▇ are less than the GMP. Upon Substantial Construction
Completion, fifty (50) percent of the projected savings of the difference in the
GMP and T&M ▇▇▇▇▇▇▇▇ shall be billed and due per Article 10.1. Upon Final
Construction Completion, the final savings amount shall be calculated and the
overall adjustment from the previously projected saving shall be included in the
final billing. and paid per Article 10.5. No payments made or shared savings
provided under this Section 3.2.6 shall alter or modify the GMP.
3.2.7 CONSTRUCTION SERVICES The Construction Phase will commence upon the
confirmation that the Owner has obtained the necessary Project Financing and
issuance by the Owner of a written Notice to Proceed as defined herein. In order
to complete the Work, the Design-Builder shall:
.1 provide all necessary construction supervision, construction
equipment, labor, materials, tools, and subcontracted items;
.2 give all notices and comply with all laws and ordinances legally
enacted at the date of execution of the Agreement which govern the
proper performance of the Work;
.3 keep such full and detailed accounts as are necessary for proper
financial management under this Agreement and (a) the Owner shall be
afforded access to all of the Design-Builder's records, books,
correspondence, instructions, drawings, receipts, vouchers, memoranda
and similar data relating to this Agreement and (b) the Design-Builder
shall preserve all such records for a period of three years after the
final payment or longer where required by law;
.4 develop a system of cost reporting (such reporting to be included in
the progress reports delivered to the Owner pursuant to Section 10.1.8)
for the Work, including regular monitoring of actual costs for
activities in progress and estimates for uncompleted tasks and proposed
changes in the Work; and
.5 regularly remove debris and waste materials at the Worksite
resulting from the Work. Prior to discontinuing Work in an area, the
Design-Builder shall clean the area and remove all rubbish and its
construction equipment, tools, machinery, waste and surplus materials.
The Design-Builder shall minimize and confine dust and debris resulting
from construction activities. At the completion of the Work, the
Design-Builder shall remove from the Worksite all construction
equipment, tools, surplus materials, waste materials and debris.
3.3 SCHEDULE OF WORK Within fifteen (15) calendar days of the date of this
Agreement, the Design-Builder shall prepare and submit a final Schedule of Work
for the Owner's acceptance and written approval as to milestone dates. This
schedule shall indicate the dates for the start and completion of the various
stages of the Work, including the dates when information and approvals are
required from the Owner. In connection with the Design-Builder's delivery of the
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monthly progress reports required to be delivered to the Owner pursuant to
Section 10.1.8, the Design-Builder shall provide the Owner with any revisions to
the Schedule of Work that provide for the orderly, practicable and expeditious
completion of the Work in accordance with the requirements of the Contract
Documents. Each revised Schedule of Work shall be presented in such reasonable
detail as the Owner and its independent engineer may require and shall address
all material elements of the Work. The Design-Builder shall consult with the
Owner in connection with each revision to the Schedule of Work provided under
this paragraph. Notwithstanding anything contained herein to the contrary, in
the absence of a Change Order, no revision to the Schedule of Work shall in any
way amend, alter or otherwise change the Date of Substantial Construction
Completion and/or the Date of Final Construction Completion.
3.4 SAFETY OF PERSONS AND PROPERTY
3.4.1 SAFETY PRECAUTIONS AND PROGRAMS The Design-Builder shall have overall
responsibility for safety precautions and programs in the performance of the
Work. While the provisions of this Paragraph establish the responsibility for
safety between the Owner and the Design-Builder, they do not relieve
Subcontractors of their responsibility for the safety of persons or property in
the performance of their work, nor for compliance with the provisions of
applicable laws and regulations.
3.4.2 The Design-Builder shall seek to avoid injury, loss or damage to persons
or property by taking reasonable steps to protect:
.1 its employees and other persons at the Worksite;
.2 materials, supplies and equipment stored at the Worksite for use in
performance of the Work; and
.3 the Project and all property located at the Worksite and adjacent to
work areas, whether or not said property or structures are part of the
Project or involved in the Work.
3.4.3 DESIGN-BUILDER'S SAFETY PROGRAM The Design-Builder's On-Site Safety
Program shall include all OSHA required elements and the following components:
.1 Established and administrated on-site Drug Prevention and Alcohol
Testing Program.
.2 Established and administrated on-site Safety Orientation Training
and Education Program.
3.4.4 DESIGN-BUILDER'S SAFETY REPRESENTATIVE The Design-Builder shall designate
an individual at the Worksite in the employ of the Design-Builder who shall act
as the Design-Builder's designated safety representative with a duty to prevent
accidents. The Design-Builder will report immediately in writing all accidents
and injuries occurring at the Worksite to the Owner. If the Design-Builder is
required to file an accident report with a public authority, the Design-Builder
shall furnish a copy of the report to the Owner.
3.4.5 The Design-Builder shall provide the Owner with copies of all notices
required of the Design-Builder by law or regulation. The Design-Builder's safety
program shall comply with the requirements of governmental and
quasi-governmental authorities having jurisdiction over the Work.
3.4.6 Damage or loss not insured under property insurance which may arise from
the performance of the Work, to the extent of the negligence attributed to such
acts or omissions of the Design-Builder, or anyone for whose acts the
Design-Builder may be liable, shall be promptly remedied by the Design-Builder.
Damage or loss attributable to the acts or omissions of the Owner or Others and
not to the Design-Builder shall be promptly remedied by the Owner.
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3.4.7 If the Owner or Owner's representative deems any part of the Work or
Worksite unsafe, the Owner, without assuming responsibility for the
Design-Builder's safety program, may require the Design-Builder to stop
performance of the Work or take corrective measures satisfactory to the Owner,
or both. The Design-Builder agrees to make no claim for damages, for an increase
in the GMP, the Design-Builder's Fee and/or the Date of Substantial Construction
Completion and/or the Date of Final Construction Completion based on the
Design-Builder's compliance with the Owner's reasonable request.
3.5 HAZARDOUS MATERIALS
3.5.1 The Design-Builder shall not be obligated to commence or continue work
until all Hazardous Material discovered at the Worksite has been removed,
rendered or determined to be harmless by the Owner as certified by an
independent testing laboratory approved by the appropriate government agency.
3.5.2 If after the commencement of the Work, Hazardous Material is discovered at
the Project, the Design-Builder shall be entitled to immediately stop Work in
the affected area. The Design-Builder shall report the condition to the Owner
and, if required, the government agency with jurisdiction. the Design-Builder
reserves the right to remove any identified Hazardous Material under a separate
Time and Material Contract.
3.5.3 The Design-Builder shall not be required to perform any Work relating to
or in the area of Hazardous Material without written mutual agreement.
3.5.4 The Owner shall be responsible for retaining an independent testing
laboratory to determine the nature of the material encountered and weather it is
a Hazardous Material requiring corrective measures and/or remedial action. Such
measures shall be the sole responsibility of the Owner, and shall be performed
in a manner minimizing any adverse effects upon the Work of the Design-Builder.
The Design-Builder shall resume Work in the area affected by any Hazardous
Material only upon written agreement between the parties (which agreement shall
not be unreasonably withheld) after the Hazardous Material has been removed or
rendered harmless and only after approval, if necessary, of the governmental
agency or agencies with jurisdiction.
3.5.5 If the Design-Builder incurs additional costs and/or is delayed due to the
presence or remediation of Hazardous Material, the Design-Builder shall be
entitled to an equitable adjustment in the GMP, compensation for Work performed,
the Design-Builder's Fee and/or the Date of Substantial Construction Completion
and/or the Date of Final Construction Completion.
3.5.6 Provided the Design-Builder, its Subcontractors, Material Suppliers and
Sub-subcontractors, and the agents, officers, directors and employees of each of
them, have not, acting under their own authority, knowingly entered upon any
portion of the Work containing Hazardous Materials, and to the extent not caused
by the negligent acts or omissions of the Design-Builder, its Subcontractors,
Material Suppliers and Sub-subcontractors, and the agents, officers, directors
and employees of each of them, the Owner shall defend, indemnify and hold
harmless the Design-Builder, its Subcontractors and Sub-subcontractors, and the
agents, officers, directors and employees of each of them, from and against any
and all direct claims, damages, losses, costs and expenses, including but not
limited to attorney's fees, costs and expenses incurred in connection with any
dispute resolution process, arising out of or relating to the performance of the
Work in any area affected by Hazardous Material. To the fullest extent permitted
by law, such indemnification shall apply regardless of the fault, negligence,
breach of warranty or contract, or strict liability of the Owner.
3.5.7 Material Safety Data (MSD) sheets as required by law and pertaining to
materials or substances used or consumed in the performance of the Work, whether
obtained by the Design-Builder, Subcontractors, the Owner or Others, shall be
maintained at the Project by the Design-Builder and made available to the Owner
and Subcontractors.
3.5.8 During the Design-Builder's performance of the Work, the Design-Builder
shall be responsible for the proper handling of all materials brought to the
Worksite by the Design-Builder. Upon the issuance of the Certificate of
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Substantial Construction Completion, the Owner shall be responsible under this
Paragraph for materials and substances brought to the site by the Design-Builder
if such materials or substances are required by the Contract Documents.
3.5.9 The terms of this Paragraph 3.5 shall survive the completion of the Work
under this Agreement and/or any termination of this Agreement.
3.6 ROYALTIES, PATENTS AND COPYRIGHTS The Design-Builder shall pay all royalties
and license fees which may be due on the inclusion of any patented or
copyrighted materials, methods or systems selected by the Design-Builder and
incorporated in the Work. The Design-Builder shall defend, indemnify and hold
the Owner harmless from all suits or claims for infringement of any patent
rights, filed patent applications or copyrights arising out of such selection.
The Owner agrees to defend, indemnify and hold the Design-Builder and Engineer
harmless from all suits or claims of infringement of any patent rights, filed
patent applications or copyrights arising out of any patented or copyrighted
materials, methods or systems specified by the Owner (excluding materials,
methods or systems of Engineer). For purposes of this Section 3.6 and the
indemnification obligations of the Design-Builder to the Owner contained herein,
"materials, methods or systems selected by the Design-Builder' shall be deemed
to include the materials, methods or systems of Engineer provided to the
Design-Builder for inclusion in the Project.
3.7 WARRANTIES AND COMPLETION
3.7.1 The Design-Builder warrants that all materials and equipment furnished
under this Agreement will be new, of good quality, in conformance with the
Contract Documents, and free from defective workmanship and materials.
Warranties shall commence on the Date of Substantial Construction Completion of
the Work or of a designated portion thereof. The Design-Builder agrees to
correct all construction performed under this Agreement which is defective in
construction workmanship or materials within a period of one year from the Date
of Substantial Construction Completion. Corrective Work performed by the
Design-Builder to accomplish that purpose shall be subject to an additional
express warranty as provided for in this Section 3.7.1 that shall last until the
earlier of (a) one year from the date such corrective Work is completed or (b)
eighteen months from the Date of Substantial Construction Completion.
3.7.2 To the extent products, equipment, systems or materials incorporated in
the Work are specified and purchased by the Owner; they shall be covered
exclusively by the warranty of the manufacturer. There are no warranties that
extend beyond the description on the face of any such warranty. To the extent
products, equipment, systems or materials incorporated in the Work are specified
by the Owner but purchased by the Design-Builder and are inconsistent with
selection criteria that otherwise would have been followed by the
Design-Builder, the Design-Builder shall assist the Owner in pursuing warranty
claims. A list of all material items purchased by the Design-Builder that are
inconsistent with the selection criteria that otherwise would have been followed
by the Design-Builder is set forth on Exhibit M. ALL OTHER WARRANTIES EXPRESSED
OR IMPLIED INCLUDING THE WARRANTY OF MERCHANTABILITY AND THE WARRANTY OF FITNESS
FOR A PARTICULAR PURPOSE ARE EXPRESSLY DISCLAIMED.
3.7.3 The Design-Builder shall secure required certificates of inspection,
testing or approval and deliver them to the Owner.
3.7.4 The Design-Builder shall collect all written warranties and equipment
manuals and deliver them to the Owner in a format directed by the Owner.
3.7.5 With the assistance of the Owner's maintenance personnel, the
Design-Builder shall direct the checkout of utilities and start up operations,
and adjusting and balancing of systems and equipment for readiness.
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3.8 CONFIDENTIALITY The Design-Builder shall treat as confidential and not
disclose to third persons, except Subcontractors, Sub-subcontractors, the
Engineer and the Financing Parties and their representatives as is necessary for
the performance of the Work, or use for its own benefit any of the Owner's
developments, confidential information, know-how, discoveries, production
methods and the like that may be disclosed to the Design-Builder or which the
Design-Builder may acquire in connection with the Work. The Owner shall treat as
confidential information all of the Design-Builder's estimating systems
historical and parameter cost data and the Engineer's Design/Process information
that may be disclosed to the Owner in connection with the performance of this
Agreement.
3.9 ADDITIONAL SERVICES The Design-Builder shall provide or procure the
following Additional Services upon the request of the Owner. A written agreement
between the Owner and the Design-Builder shall define the extent of such
Additional Services before they are performed by the Design-Builder. Such
Additional Services shall be considered a Change in the Work, unless they are
specifically included in the statement of the basis of the GMP.
.1 Consultations, negotiations, and documentation supporting the
procurement of Project financing.
.2 Surveys, site evaluations, legal descriptions and aerial
photographs.
.3 Appraisals of existing equipment, existing properties, new equipment
and developed properties.
.4 Consultations and representations before governmental authorities or
others having jurisdiction over the Project other than normal
assistance in securing building permits.
.5 Investigation or making measured drawings of existing conditions or
the reasonably required verification of Owner-provided drawings and
information.
.6 Artistic renderings, models and mockups of the Project or any part
of the Project or the Work.
.7 Estimates, proposals, appraisals, consultations, negotiations and
services in connection with the repair or replacement of an insured
loss, provided such repair or replacement did not result from the
negligence of the Design-Builder.
.8 Obtaining service contractors and training maintenance personnel,
assisting and consulting in the use of systems and equipment after the
initial start up.
.9 Services for tenant or rental spaces not a part of this Agreement.
.10 Services requested by the Owner or required by the Work which are
not specified in the Contract Documents and which are not normally part
of generally accepted design and construction practice.
.11 Serving or preparing to serve as an expert witness in connection
with any proceeding, legal or otherwise, regarding the Project.
.12 Document reproduction exceeding the limits provided for in this
Agreement.
3.10 PERMITS
3.10.1 DESIGN BUILDER PERMITS Notwithstanding anything in this Agreement to the
contrary, the Design-Builder shall timely obtain and maintain (at the Owner's
expense) all Design Builder Permits. In addition, the Design-Builder shall
provide all assistance reasonably requested by the Owner in connection with the
Owner's efforts to obtain and maintain the Owner Permits, including, without
limitation, witnesses testimony, depositions, preparation of exhibits, technical
11
calculations and attending meetings. In the event that any Applicable Permit is
required for the Project or to perform the Work that is not identified in the
Contract Documents, the Design-Builder or the Owner, as applicable, shall
promptly, after it becomes aware of the need for such Applicable Permit, notify
the other party that such Applicable Permit is required. If such permit is of a
nature typically obtained by contractors in similar projects, the Design-Builder
shall, at the Owner's sole cost and expense, be obligated to obtain and maintain
such Applicable Permit on behalf of the Owner. Otherwise, the Owner shall obtain
and maintain such Applicable Permit.
3.10.2 ISSUANCE OF PERMITS All Applicable Permits (other than any building
permits (but excluding any applicable occupancy certificates) or other
Applicable Permits designated as either "To be issued in the name of the
Design-Builder" or "To be issued in the name of the Owner and the
Design-Builder" on Exhibit J or Exhibit K) shall be issued in the name of the
Owner unless otherwise required by applicable Law or such Applicable Permit. If
any Design-Builder Permit (or application therefor) is in the name of the Owner
or otherwise requires action by the Owner, the Owner shall, upon the request of
the Design-Builder, sign such application or take such action as reasonably
appropriate.
3.10.3. REVIEW OF PERMITS The Owner reserves the right to review any such
application of the Design-Builder; provided, however, that the Owner's exercise
of such right shall not under any circumstances, be considered an approval of
the necessity, effect or contents of such application or related permit. The
Design-Builder shall deliver to the Owner true and complete copies of all
Applicable Permits obtained by the Design-Builder upon its receipt thereof. The
Design-Builder shall use best efforts to identify in writing to the Owner all
Applicable Permits and other government requirements for performance of the Work
not identified in the Contract Documents, or shall confirm in writing that, to
the best of the Design-Builder's knowledge, there are no such Applicable Permits
or other government requirements other than as identified in the Contract
Documents prior to the date of this Agreement.
3.11 DESIGN-BUILDER'S REPRESENTATIVE The Design-Builder shall designate a person
who shall be the Design-Builder's authorized representative. The
Design-Builder's Representative is: ▇▇. ▇▇▇▇ ▇▇▇▇▇.
ARTICLE 4 -OWNER'S RESPONSIBILITIES
4.1 INFORMATION AND SERVICES PROVIDED BY OWNER
4.1.1 The Owner shall provide full information in a timely manner regarding
requirements for the Project, including the Owner's Program and other relevant
information.
4.1.2 The Owner shall provide:
.1 all available information describing the physical characteristics of
the site, including surveys, site evaluations, legal descriptions,
existing conditions, subsurface and environmental studies, reports and
investigations;
.2 inspection and testing services during construction as required by
law or as mutually agreed; and
.3 unless otherwise provided in the Contract Documents, necessary
approvals, site plan review, rezoning, easements and assessments, fees,
permits and charges required for the construction, use, occupancy or
renovation of permanent structures, including legal and other required
services.
4.1.3 The Owner shall provide reasonable evidence satisfactory to the
Design-Builder, prior to commencing the Work and during the progress of the
Work, that sufficient funds are available and committed for the entire cost of
the Project, including a reasonable allowance for changes in the Work as may be
approved in the course of the Work. Unless such reasonable evidence is provided,
the Design- Builder shall not be required to commence or continue the Work. The
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Design-Builder may stop Work after seven (7) days written notice to the Owner if
such evidence is not presented within a reasonable time. The failure of the
Design-Builder to insist upon the providing of this evidence at any one time
shall not be a waiver of the Owner's obligation to make payments pursuant to
this Agreement, nor shall it be a waiver of the Design-Builder's right to
require that such evidence be provided at a later date.
4.1.4 The Design-Builder shall be entitled to rely on the completeness and
accuracy of the information and services required by this Paragraph 4.1.
4.2 [RESERVED.]
4.3 OWNER RESPONSIBILITIES
4.3.1 The Owner shall review the Schedule of the Work as set forth in Paragraph
3.3 and timely approve the milestone dates set forth.
4.3.2 If the Owner becomes aware of any error, omission or failure to meet the
requirements of the Contract Documents or any fault or defect in the Work, the
Owner shall give prompt written notice to the Design-Builder.
4.3.3 The Owner shall communicate with the Design-Builder's Subcontractors,
Material Suppliers and the Engineer only through or in the presence of the
Design-Builder. The Owner shall have no contractual obligations to
Subcontractors, suppliers, or the Engineer.
4.3.4 The Owner shall provide insurance for the Project as provided in Article
11.
4.3.5 The Owner agrees that it shall consult with the Design-Builder prior to
making the final $500,000.00 payment in respect of any license fee due to the
Engineer in order to verify that the Engineer is in compliance with the terms of
all contractual arrangements of the Engineer relating to the Project. Funds
shall be applied against any outstanding delay or performance liquidated damages
as applicable to the Engineer's scope of services.
4.4 OWNER'S REPRESENTATIVE The Owner's Representative IS ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇. The
Representative:
.1 shall be fully acquainted with the Project;
.2 agrees to furnish the information and services required of the Owner
pursuant to Paragraph 4.1 so as not to delay the Design-Builder's Work;
and
.3 shall have authority to bind the Owner in all matters requiring the
Owner's approval, authorization or written notice if the Owner changes
its representative or the representative's authority as listed above,
the Owner shall notify the Design-Builder in writing in advance.
4.5 TAX EXEMPTION If in accordance with the Owner's direction the Design-Builder
may claim an exemption for taxes and the Owner shall defend, indemnify and hold
the Design-Builder harmless for all liability, penalty, interest, fine, tax
assessment, attorney's fees or other expense or cost incurred by the
Design-Builder as a result of any action taken by the Design-Builder in
accordance with the Owner's direction.
ARTICLE 5 - SUBCONTRACTS
Work not performed by the Design-Builder with its own forces shall be performed
by Subcontractors or the Engineer.
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5.1 RETAINING SUBCONTRACTORS The Design-Builder shall not retain any
subcontractor to whom the Owner has a reasonable and timely objection, provided
that the Owner agrees to compensate the Design-Builder for any additional costs
incurred by the Design-Builder as a result of such objection. The Owner may
propose subcontractors to be considered by the Design-Builder. The
Design-Builder shall not be required to retain any subcontractor to whom the
Design-Builder has a reasonable objection.
5.2 MANAGEMENT OF SUBCONTRACTORS The Design-Builder shall be responsible for the
management of the Subcontractors and the Engineer in the performance of their
work and cause all Subcontractors, the Engineer and third party
sub-subcontractors and suppliers, as necessary, to comply with all of the
provisions of the Agreement.
5.3 BINDING OF SUBCONTRACTORS AND MATERIALS SUPPLIERS The DESIGN-BUILDER agrees
to bind every Subcontractor, the Engineer and Material Supplier (and require
every Subcontractor to so bind its Sub-subcontractors and Material Suppliers) to
all the provisions of this Agreement and the Contract Documents as they apply to
the Subcontractor's, the Engineer's and Material Supplier's portions of the
Work.
6.4 LABOR RELATIONS As of the date of this Agreement, the Design-Builder is
signatory to the following labor agreements:
1. Northern Operating Engineers
2. Northern Laborers
3. Northern Pipe Fitters
4. Northern Carpenters
5. Northern Millwrights
6. Northern Cement Masons
ARTICLE 6 -- TIME
6.1 DATE OF COMMENCEMENT Time is of the essence. The Date of Commencement is the
effective date of this Agreement as first written in Article 1; provided,
however, that Work under this Agreement shall not commence until the deed of
trust evidencing the Financing Parties' security interest in all or
substantially all of the Project site has been properly recorded. Any Notice to
Proceed delivered pursuant to this Agreement may be issued concurrently with the
disbursement of the initial loan made by the Financing Parties to the Owner, but
such Notice to Proceed shall not be effective until the Financing Parties have
recorded their deed of trust. The Owner agrees to use is commercially reasonable
efforts to provide the Design-Builder with 10 Business Days' advance notice of
the issuance of any Notice to Proceed. The Work shall proceed in general
accordance with the Schedule of Work as such schedule may be amended from time
to time, subject, however, to other provisions of this Agreement.
6.2 SUBSTANTIAL/FINAL CONSTRUCTION COMPLETION The proposed and actual dates of
Substantial Construction Completion and Final Construction Completion, subject
to adjustments as provided for in the Contract Documents, are established
pursuant to the terms hereof.
6.2.1 Time limits stated in the Contract Documents are of the essence.
6.3 DELAYS IN THE WORK
6.3.1 Notwithstanding anything in this Agreement to the contrary, the GMP, the
Design-Builder's Fee and the dates of Substantial Construction Completion and
Final Construction Completion may be adjusted only and as and to the extent
provided for in Sections 6.4, 9.1, 9.4 and 9.7, or as a result of Owner-Caused
Delay.
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6.3.2 In the event delays to the Project are encountered for any reason, the
parties agree to undertake reasonable steps to mitigate the effect of such
delays.
6.4 FORCE MAJEURE
6.4.1 As used herein, "Force Majeure Event" means any cause(s) which render(s) a
party wholly or partly unable to perform its obligations under this Agreement
(other than obligations to make payments when due), and which are neither
reasonably within the control of such party nor the result of the fault or
negligence of such party, and which occur despite all reasonable attempts to
avoid, mitigate or remedy, and shall include acts of God, war, riots, civil
insurrections, adverse weather conditions, cyclones, hurricanes, floods, fires,
explosions, earthquakes, lightning, storms, chemical contamination, epidemics or
plagues, acts or campaigns of terrorism or sabotage, blockades, embargoes,
accidents or interruptions to transportation not caused by the Design-Builder,
trade restrictions, acts of any governmental authority after the date of this
Agreement, failure to obtain Applicable Permits (provided, that the party
responsible for such Applicable Permits has diligently pursued the receipt
thereof), strikes and other labor difficulties not caused by the Design-Builder,
mechanical breakdowns, and other events or circumstances beyond the reasonable
control of such party.
6.4.2 A party claiming relief as a result of a Force Majeure Event shall give
the other parties written notice within ten (10) Business Days of becoming aware
of the occurrence of the Force Majeure Event, or as soon thereafter as
practicable, describing the particulars of the Force Majeure Event, and will use
reasonable efforts to remedy its inability to perform as soon as possible. If
the Force Majeure Event (including the effects thereof) continues for fifteen
(15) consecutive days, the affected party shall report to the other parties the
status of its efforts to resume performance and the estimated date thereof. If
the affected party was not able to resume performance prior to or at the time of
the report to the other parties of the onset of the Force Majeure Event, then it
will report in writing to the other parties when it is again able to perform. If
a party fails to give timely notice, the excuse for its non-performance shall
not begin until notice is given.
6.4.3 Any obligations) of a party (other than an obligation to make payments
when due) may be temporarily suspended during any period such party is unable to
perform such obligation(s) by reason of the occurrence of a Force Majeure Event,
but only to the extent of such inability to perform, PROVIDED, that: (a) the
suspension of performance is of no greater scope and of no longer duration than
is reasonably required by the Force Majeure Event; and (b) the party claiming
the occurrence of the Force Majeure Event bears the burden of proof.
6.4.4 If the Force Majeure Event (including the effects thereof) continues for
one hundred eighty (180) consecutive days, the affected party may terminate this
Agreement for convenience. In connection with any termination of this Agreement
by the Owner pursuant to this Section 6.4.4, the Owner shall not be required to
pay the termination fee set forth in Section 12.2.1.
ARTICLE 7 - COMPENSATION
7.1 [RESERVED.]
7.2 CONSTRUCTION PHASE COMPENSATION
7.2.1 The Owner shall compensate the Design-Builder for Work performed following
the commencement of Work on the following basis:
.1 the Cost of the Work; and
.2 the Design-Builder's Fee paid in proportion to the services
performed subject to adjustment as provided in Paragraph 7.4.
7.2.2 The compensation to be paid under this Paragraph 7.2 shall be limited to
the established GMP, as may be adjusted under Article 9.
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7.2.3 Payment for Construction Phase Services shall be as set forth in Article
10.
7.3 DESIGN-BUILDER'S FEE The Design-Builder's Fee shall be as follows, subject
to adjustment as provided in Paragraph 7.4, Time and Material Costs per Exhibit
B for the scope of services listed in Exhibit D payable each month as provided
in Paragraph 7.1.5.
7.4 ADJUSTMENT IN THE DESIGN-BUILDER'S FEE Adjustment in the Design-Builder's
Fee shall be made as follows:
.1 for changes in the Work as provided in Article 9, the
Design-Builder's Fee shall be adjusted per the most current Time and
Material Costs as outlined in Exhibit B for the scope of work fisted in
Exhibit D.
.2 for delays in the Work not caused by the Design-Builder, as provided
in Subparagraph 6.3.1, and except as provided in Subparagraph 6.3.2,
there will be an equitable adjustment in the Design-Builder's Fee to
compensate the Design-Builder for increased expenses; and
.3 if the Design-Builder is placed in charge of managing the
replacement of an insured or uninsured loss, the Design-Builder shall
be paid an additional fee in the same proportion that the
Design-Builder's Fee bears to the estimated Cost of the Work for the
replacement.
The Owner agrees to pay the Design-Builder for the Cost of the Work as defined
in this Article. This payment shall be in addition to the Design-Builder's Fee
stipulated in Paragraph 7.3.
7.5 DELAY LIQUIDATED DAMAGES/INCENTIVE BONUS
7.5.1 For delays in the Work beyond the scheduled Substantial Construction
Completion date (as such date may be modified pursuant to the terms of this
Agreement) caused by the Design-Builder or those under the control of the
Design-Builder, except as provided in Section 6.3 and excluding any Owner-Caused
Delay, the Design-Builder shall pay Liquidated Damages to the Owner for economic
and/or financial loss and reimbursement. Accordingly, the Design-Builder and the
Owner agree that for each calendar day that expires after the scheduled Date of
Substantial Construction Completion until Substantial Construction Completion
actually occurs, the Design-Builder shall pay as Liquidated Damages for such
delay an amount equal to twenty-three thousand dollars ($23,000) MINUS the
product of twenty-three thousand dollars ($23,000) TIMES the Daily Operating
Rate for such day. Such Liquidated Damages in this amount constitutes any actual
or consequential damages that would be suffered by the Owner if the Work were
not actually completed by the scheduled Date of Substantial Construction
Completion. For the purposes of this Section 7.5.1, the "Daily Operating Rate"
means the ratio, expressed as a decimal, of the actual operating capacity
(expressed in millions of gallons per year) for any such day OVER 35 million
gallons per year. Amounts owed by the Design-Builder to the Owner under this
Section 7.5.1 shall accrue and be payable monthly in arrears, with this first
such payment to be made thirty (30) days after the date on which the delay
Liquidated Damages first accrue.
7.5.2 As a performance incentive bonus for achieving Substantial Construction
Completion in advance of the scheduled Date of Substantial Construction
Completion (as such date may be modified pursuant to the terms of this
Agreement), the Owner shall pay the Design-Builder twelve thousand five hundred
dollars ($12,500) per calendar day for each day in advance Substantial
Construction Completion occurs. The performance incentive bonus amount
constitutes the payment to the Design-Builder for performing the Work and
contractual obligations before the scheduled Date of Substantial Construction
Completion as defined herein. Fifty percent (50%) of any incentive bonus owed by
the Owner to the Design-Builder under this Section 7.5.2 shall be payable thirty
(30) days after the Date of Substantial Construction Completion, and the
remaining amount of such incentive bonus shall be due and payable once Final
Construction Completion is achieved (net of any performance liquidated damages
payable by the Design-Builder to the Owner hereunder or pursuant to Exhibit H).
16
7.5.3 The aggregate amount of delay Liquidated Damages or incentive bonus, as
applicable, in respect of Substantial Construction Completion paid by a party
pursuant to this Section 7.5 shall not exceed two million five hundred thousand
dollars ($2,500,000).
ARTICLE 8 - LIENS
8.1 DISCHARGE OF LIENS Provided the Owner has paid the Design-Builder as
required under this Agreement, within ten (10) days of receiving any notice of
any Lien filed by any Subcontractor, or any person working for, or through, the
Design-Builder or any Subcontractor, the Design-Builder shall promptly commence
to cause such Lien to be discharged or satisfied by bond or otherwise including,
without limitation, by raising valid counterclaims against such Subcontractor.
The expense of discharging or satisfying by bond any such Lien shall be paid by
the Design-Builder at its sole cost and expense and shall not be a part of the
GMP payable to the Design-Builder. The Design-Builder shall indemnify, defend
and hold harmless the Owner, its affiliates and all persons acting for any of
them, from and against any Lien against the property of the Owner. If the Owner
receives notice of any such Lien, the Owner shall provide notice thereof to the
Design-Builder. The Design-Builder shall promptly commence all necessary
proceedings to discharge or satisfy by bond any such Lien as soon as possible,
bearing all the relevant costs thereof. The Owner shall have the right to retain
and withhold amounts on account of the GMP in an amount sufficient to indemnify
the Owner against any such Lien until such time as the Owner becomes satisfied
that such Lien is discharged or satisfied by bond.
8.2 LIEN WAIVERS IN CONNECTION WITH PAYMENT As a condition precedent to the
making of any payment hereunder, the Design-Builder shall (a) in connection with
any progress payment, provide the Owner with a signed certificate in the form
attached hereto as Exhibit L-1 at the time the Design-Builder submits an invoice
for such progress payment or (b) in connection with the final payment, provide
the Owner with a signed certificate in the form attached hereto as Exhibit L-2
at the time the Design-Builder submits an invoice for such final payment. As a
condition precedent to Final Construction Completion, the Design-Builder shall
have delivered to the Owner a signed certificate in the form attached hereto as
Exhibit L-3.
ARTICLE 9 - CHANGES IN THE WORK
Changes in the Work which are within the general scope of this Agreement may be
accomplished, without invalidating this Agreement, by Change Order, Work Change
Directive, or a minor change in the work, subject to the limitations stated in
the Contract Documents.
9.1 CHANGE ORDER
9.1.1 The Design-Builder may request and/or the Owner, without invalidating this
Agreement, may order changes in the Work within the general scope of the
Contract Documents consisting of additions, deletions or other revisions to the
GMP or the estimated cost of the work, the Design-Builder's Fee and/or the Date
of Substantial Construction Completion and/or the Date of Final Construction
Completion being adjusted accordingly. All such changes in the Work shall be
authorized by applicable Change Order, and shall be performed under the
applicable conditions of the Contract Documents.
9.1.2 Each adjustment in the GMP and/or estimated Cost of the Work resulting
from a Change Order shall clearly separate the amount attributable to
compensation for the Cost of Work and the Design-Builder's Fee
9.1.3 The Owner and the Design-Builder shall negotiate in good faith an
appropriate adjustment to the GMP or the estimated Cost of the Work, the
Design-Builder's Fee and/or the Date of Substantial Construction Completion
and/or the Date of Final Construction Completion and shall conclude these
negotiations as expeditiously as possible. Acceptance of the Change Order and
any adjustment in the GMP, the estimated Cost of the Work, the Design-Builder's
Fee and/or the Date of Substantial Construction Completion and/or the Date of
Final Construction Completion shall not be unreasonably withheld.
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9.2 PROPOSED CHANGE ORDERS (PCO'S)
9.2.1 The Owner may issue a written Proposed Change Orders directing a change in
the Work prior to reaching agreement with the Design-Builder on the adjustment,
if any, in the GMP, estimated Cost of the Work, the Design-Builder's Fee, the
Date of Substantial Construction Completion and/or the Date of Final
Construction Completion.
9.2.2 The Owner and the Design-Builder shall negotiate expeditiously and in good
faith for appropriate adjustments, as applicable, to the GMP, estimated Cost of
the Work, the Design-Builder's Fee, the Date of Substantial Construction
Completion and/or the Date of Final Construction Completion, arising out of
Proposed Change Orders. As the changed work is completed, the Design-Builder
shall submit its costs for such work with its application for payment beginning
with the next application for payment within thirty (30) days of the issuance of
the Proposed Change Orders pending final determination of cost to the Owner,
amounts not in dispute may be included in applications for payment and shall be
paid by Owner.
9.2.3 If the Owner and the Design-Builder agree upon the adjustments in the GMP,
estimated Cost of the Work, the Design-Builder's Fee, the Date of Substantial
Construction Completion and/or the Date of Final Construction Completion, for a
change in the Work directed by a Proposed Change Order, such agreement shall be
the subject of an appropriate Change Order. The Change Order shall include all
outstanding PCO's issued since the last Change Order.
9.3 MINOR CHANGES IN THE WORK
9.3.1 The Design-Builder may make minor changes in the design and construction
of the Project consistent with the intent of the Contract Documents which do not
involve an adjustment in the GMP, estimated Cost of the Work, the
Design-Builder's Fee, the Date of Substantial Construction Completion and/or the
Date of Final Construction Completion, and do not materially and adversely
affect the design of the Project, the quality of any of the materials or
equipment specified in the Contract Documents, the performance of any materials,
equipment or systems specified in the Contract Documents, or the quality of
workmanship required by the Contract Documents.
9.3.2 The Design-Builder shall promptly inform the Owner in writing of any such
changes and shall record such changes on the Design-Build Documents maintained
by the Design-Builder.
9.4 UNKNOWN CONDITIONS If in the performance of the Work the Design-Builder
finds latent, concealed or subsurface physical conditions or any Pre-Existing
Hazardous Materials which materially differ from the conditions the
Design-Builder reasonably anticipated, or if physical conditions are materially
different from those normally encountered and generally recognized as inherent
in the kind of work provided for in this Agreement, then the GMP, estimated Cost
of the Work, the Design-Builder's Fee, the Date of Substantial Construction
Completion and/or the Date of Final Construction Completion shall be equitably
adjusted by Change Order within a reasonable time after the conditions are first
observed. The Design-Builder shall provide the Owner with written notice within
the time period set forth in Paragraph 9.6.
9.5 DETERMINATION OF COST
9.5.1 An increase or decrease in the GMP and/or estimated Cost of the Work
resulting from a change in the Work shall be determined be Time and Material
Costs per Exhibit B as defined in Paragraph 7.2, Article 8 and subparagraph
7.4.1.
9.5.2 If the Owner and the Design-Builder disagree as to whether work required
by the Owner is within the scope of the Work, the Design-Builder shall furnish
the Owner with an estimate of the costs to perform the disputed work in
accordance with the Owner's interpretations. If the Owner issues a written order
for the Design-Builder to proceed, the Design-Builder shall perform the disputed
18
work and the Owner shall pay the Design-Builder fifty percent (50%) of its
estimated cost to perform the work. In such event, both parties reserve their
rights as to whether the work was within the scope of the Work. The Owner's
payment does not prejudice its right to be reimbursed should it be determined
that the disputed work was within the scope of Work. The Design-Builder's
receipt of payment for the disputed work does not prejudice its right to receive
full payment for the disputed work should it be determined that the disputed
work is not within the scope of the Work.
9.6 EMERGENCIES In any emergency affecting the safety of persons and/or
property, the Design-Builder shall act, at its discretion, to prevent threatened
damage, injury or loss. Any change in the GMP, estimated Cost of the Work, the
Design-Builder's Fee, the Date of Substantial Construction Completion and/or the
Date of Final Construction Completion on account of emergency work shall be
determined as provided in this Article.
9.7 CHANGES IN LAW In the event any changes in laws or regulations affecting the
performance of the Work are enacted after the date of this Agreement, the GMP,
estimated Cost of the Work, the Design-Builder's Fee, the Date of Substantial
Construction Completion and/or the Date of Final Construction Completion shall
be equitably adjusted by Change Order.
ARTICLE 10 -- PAYMENT FOR CONSTRUCTION PHASE SERVICES
10.1 PROGRESS PAYMENTS
10.1.1 On the 5th day of each month after the Construction Phase has commenced,
the Design-Builder shall submit to the Owner an application for payment
consisting of the Cost of the Work performed up to the end of the month,
including the cost of material suitably stored on the Worksite or at other
locations approved by the Owner, along with a proportionate share of the
Design-Builder's Fee. Approval of payment applications for such stored materials
shall be conditioned upon submission by the Design-Builder of bills of sale and
applicable insurance or such other procedures satisfactory to the Owner to
establish the Owner's title to such materials, or otherwise to protect the
Owner's interest, including transportation to the site. Prior to submission of
the next application for payment, the Design-Builder shall furnish to the Owner
a statement accounting for the disbursement of funds received under the previous
application. The extent of such statement shall be as agreed upon between the
Owner and the Design-Builder.
10.1.2 Within ten (10) days after receipt of each monthly application for
payment, the Owner shall give written notice to the Design-Builder of the
Owner's acceptance or rejection, in whole or in part, of such application for
payment. Within fifteen (15) days after accepting such application, the Owner
shall pay directly to the Design-Builder the appropriate amount for which
application for payment is made, less amounts previously paid by the Owner. If
such application is rejected in whole or in part, the Owner shall indicate the
reasons for its rejection. If the Owner and the Design-Builder cannot agree on a
revised amount then, within fifteen (15) days after its initial rejection in
part of such application, the Owner shall pay directly to the Design-Builder the
appropriate amount for those items not rejected by the Owner for which
application for payment is made, less amounts previously paid by the Owner.
Those items rejected by the Owner shall be due and payable when the reasons for
the rejection have been removed.
10.1.3 If the Owner fails to pay the Design-Builder at the time payment of any
amount becomes due, then the Design-Builder may, at any time thereafter, upon
serving written notice that the Work will be stopped within seven (7) days after
receipt of the notice by the Owner, and after such seven day period, stop the
Work until payment of the amount owing has been received.
10.1.4 Payments due but unpaid pursuant to Subparagraph 10.1.2, less any amount
retained pursuant to Paragraphs 10.2 and 10.3 may bear interest from the date
payment is due at the prime rate prevailing at the place of the Project.
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10.1.5 The Design-Builder warrants and guarantees that a conditional release of
all Work, materials and equipment covered by a dated application for payment
will pass to the Owner upon submission. In connection with each progress payment
and the final payment hereunder, the Design-Builder shall provide to the Owner a
release of all Liens, claims, security interests or encumbrances as and to the
extent provided for in Section 8.2.
10.1.6 The Owner's progress payment, occupancy or use of the Project, whether in
whole or in part, shall not be deemed an acceptance or any Work not conforming
to the requirements of the Contract Documents.
10.1.7 Upon Substantial Construction Completion of the Work, the Owner shall pay
the Design-Builder the unpaid balance of the Cost of the Work and the
Design-Builder's Fee, less one-hundred-fifty percent (150%) of the cost of
completing any unfinished items as agreed to between the Owner and the
Design-Builder as to extent and time for completion. The Owner thereafter shall
pay the Design-Builder monthly the amount retained for unfinished items as each
item is completed.
10.1.8 In connection with each application for payment submitted by the
Design-Builder pursuant to Section 10.1.1, the Design-Builder shall prepare and
submit to the Owner and its independent engineer written progress reports, in a
form reasonably acceptable to the Owner, which include a description of the
progress and status of the Work compared to the Schedule of Work, the status of
equipment and other scheduled deliveries, the Subcontractors' activities, cost
reporting (in accordance with Section 3.2.7 hereof) and engineering, procurement
and construction progress. At the request of the Owner or its independent
engineer, photographs shall also be included documenting the construction
progress. Each photograph shall show the date, the Design-Builder's name and
description of the view taken. In accordance with Section 3.3 hereof, the
Design-Builder shall also report any events which may affect the Schedule of
Work, including any Force Majeure Events, Liens on the Project, or any asserted
violations of laws or Applicable Permits.
10.2 RETAINAGE
10.2.1 The Owner shall retain and withhold payment of ten percent (10%) of all
payments of the amount otherwise due after deduction of any amounts as provided
in Section 10.3 of this Agreement made to the Design-Builder ("Retainage") until
such time as the amount of Retainage so withheld is equal to five percent (5%)
of the Guaranteed Maximum Price hereunder. Such amount shall be held by the
Owner as security for the performance of the Design-Builder's obligations
hereunder and any interest thereon shall accrue for the account of the
Design-Builder and not the Owner. Subject to Section 10.1.7, the Owner shall
release the aggregate amount of Retainage to the Design-Builder promptly
following the Date of Substantial Construction Completion.
10.2.2 The Design-Builder and the Owner may mutually agree to establish an
escrow account for Retainage on terms and with an escrow agent reasonably
satisfactory to both parties. Subject to Section 10.1.7, Retainage deposited
into the escrow account shall be released to the Design-Builder promptly
following the Date of Substantial Construction Completion. if the Design-Builder
fails to complete its obligations under this Agreement, the Owner may use
Retainage on deposit in the escrow account to complete the Work. in addition,
any interest on Retainage deposited with the escrow agent shall accrue to the
Design-Builder and not to the Owner.
10.3 ADJUSTMENT OF DESIGN-BUILDER'S APPLICATION FOR PAYMENT The Owner may adjust
or reject an application for payment or nullify a previously approved
Design-Builder application for payment, in whole or in part, as may reasonably
be necessary to protect the Owner from loss or damage based upon the following,
to the extent that the Design-Builder is responsible under this Agreement:
.1 the Design-Builder's repeated failure to perform the Work as
required by the Contract Documents;
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.2 loss or damage arising out of or relating to this Agreement and
caused by the Design-Builder to the Owner or Others to whom the Owner
may be liable;
.3 the Design-Builder's failure to properly pay the Engineer,
Subcontractors or Material Suppliers for labor, materials, equipment or
supplies furnished in connection with the Work, provided that the Owner
is making payments to the Design-Builder in accordance with the terms
of this Agreement;
.4 Defective Work not corrected in a timely fashion;
.5 reasonable evidence of delay in performance of the Work such that
the Work will not be completed by the Date of Substantial Construction
Completion and/or the Date of Final Construction Completion, and that
the unpaid balance of the GMP is not sufficient to offset any direct
damages that may be sustained by the Owner as a result of the
anticipated delay caused by the Design-Builder; and
.6 reasonable evidence demonstrating that the unpaid balance of the
GMP is insufficient to fund the cost to complete the Work.
The Owner shall give written notice to the Design-Builder at the time of
disapproving or nullifying all or part of an application for payment of the
specific reasons. When the above reasons for disapproving or nullifying an
application for payment are removed, payment will be made for the amount
previously withheld.
10.4 OWNER OCCUPANCY OR USE OF COMPLETED WORK
10.4.1 Subject to Section 1 of Exhibit G and Section 2 of Exhibit H, the Owner
shall assume care, custody and control of the Project on the Date of Substantial
Construction Completion.
10.5 FINAL PAYMENT
10.5.1 Final Payment, consisting of the unpaid balance of the Cost of the Work
and the Design-Builder's Fee, shall be due and payable when the work is fully
completed. Before issuance of final payment, the Owner may request satisfactory
evidence that all payrolls, material bills and other indebtedness connected with
the Work have been paid or otherwise satisfied.
10.5.2 In making final payment the Owner waives all claims except for:
.1 outstanding Liens;
.2 improper workmanship or defective materials appearing within one
year after the Date of Substantial Construction Completion;
.3 work not in conformance with the Contract Documents; and
.4 terms of any special warranties required by the Contract Documents.
10.5.3 In accepting final payment, the Design-Builder waives all
claims.
ARTICLE 11 - INDEMNITY, INSURANCE, BONDS, AND WAIVER OF SUBROGATION 11.1
INDEMNITY
11.1.1 To the fullest extent permitted by law, the Design-Builder shall defend,
indemnify and hold harmless the Owner, Owner's officers, directors, members,
consultants, agents and employees from all claims for bodily injury and property
damage (other than to the Work itself and other property required to be insured
21
under Paragraph 11.5 owned by or in the custody of the Owner), that may arise
from the performance of the Work, to the extent of the negligence attributed to
such acts or omissions by the Design-Builder, Subcontractors or anyone employed
directly or indirectly by any of them or by anyone for whose acts any of them
may be liable, or as otherwise caused by a breach by the Design-Builder of its
obligations hereunder. The Design-Builder shall not be required to defend,
indemnify or hold harmless the Owner, Owner's officers, directors, members,
consultants, agents and employees for any acts, omissions or negligence of the
Owner, the Owner's officers, directors, members, consultants, employees, agents
or separate contractors.
11.1.2 To the fullest extent permitted by law, the Owner shall defend, indemnify
and hold harmless the Design-Builder, its officers, directors or members,
Subcontractors or anyone employed directly or indirectly by any of them or
anyone for whose acts any of them may be liable from all claims for bodily
injury and property damage, other than property insured under Paragraph 11.5,
that may arise from the performance of work by Others, to the extent of the
negligence attributed to such acts or omissions by Others.
11.2 DESIGN-BUILDER'S LIABILITY INSURANCE
11.2.1 The Design-Builder shall obtain and maintain insurance coverage for the
following claims which may arise out of the performance of this Agreement,
whether resulting from the Design-Builder's operations or form the operations of
any Subcontractor, anyone in the employ of any of them, or by an individual or
entity for whose acts they may be liable:
.1 workers' compensation, disability and other employee benefit claims
under acts applicable to the Work;
.2 under applicable employer's liability law, bodily injury,
occupational sickness, disease or death claims of the Design-Builder's
employees;
.3 personal injury liability claims for damages directly or indirectly
related to the person's employment by the Design-Builder or for damages
to any other person;
.4 claims for physical injury to tangible property, including all
resulting loss of use of that property, to property other than the Work
itself and property insured under Paragraph 11.5;
.5 bodily injury, death or property damage claims resulting from motor
vehicle liability in the use, maintenance or ownership of any motor
vehicle; and
.6 contractual liability claims involving the Design-Builder's
obligations under Subparagraph 11.1.1.
11.2.2 The Design-Builder's Broad Form Commercial General and Automobile
Liability Insurance as required by Subparagraph 11.2.1 shall be written for not
less than and include the following limits of liability:
.1 Commercial General Liability Insurance
a. Each Occurrence Limit $ 1,000,000
---------------
b. General Aggregate $ 2,000,000
---------------
c. Products/Completed
Operations Aggregate $ 1,000,000
---------------
d. Personal and Advertising
Injury Limit $ 1,000,000
---------------
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e. Independent Contractors $ 1,000,000
---------------
.2 Comprehensive Automobile Liability Insurance
a. Combined Single Limit Bodily
Injury and Property Damage $ 1,000,000
-----------------
Each Occurrence
11.2.3 Commercial General Liability Insurance may be arranged under a single
policy for the full limits required or by a combination of underlying policies
and an Excess or Umbrella Liability policy.
11.2.4 The policies shall contain a provision that coverage will not be canceled
or not renewed until at least thirty (30) days' notice has been given to the
Owner and the agent for the Financing Parties. Certificates of insurance showing
required coverage to be in force shall be filed with the Owner prior to
commencement of the Work.
11.2.5 Umbrella Liability Insurance shall protect the parties against claims
excess of the limits provided under the worker's compensations liability,
commercial general liability and automotive liability.
.1 Umbrella Liability Insurance
a. Umbrella Excess $ 10,000.000
-----------------
Each Occurrence
11.2.6 Pollution legal liability insurance (in an amount equal to $1,000,000 per
occurrence) shall protect the parties against claims arising from bodily injury,
death or property damage to third parties as a result of sudden and accidental
pollution.
11.2.7 Products and Completed Operations insurance shall be maintained for a
minimum period of at least 5 year(s) after final payment.
On Policies under Clauses 11.2, each party shall list the other parties and the
Owner as an additional insured, and such policies shall be primary over any
other insurance carried by the additional insured's.
11.3 PROFESSIONAL LIABILITY INSURANCE
11.3.1 The Design-Builder shall cause the Engineer shall obtain professional
liability insurance for claims arising from the negligent performance of
professional services under this Agreement, which shall be General or Project
Specific Professional Liability Insurance written for not less than acceptable
per claim/aggregate limits of not less than $5,000,000, with a deductible not to
exceed those amounts listed in the Agreement between the Design-Builder and the
Engineer. The Professional Liability Insurance shall include prior acts coverage
sufficient to cover all services rendered by the Engineer. This coverage shall
be continued in effect for 5 years after the Date of Substantial Construction
Completion.
11.3.2 On the Insurance Policies procured and carried by the Engineer under its
Agreement with the Design-Builder, each party shall list the other parties, the
Owner and the Financing Parties as additional insureds and permit a waiver of
subrogation in their favor where applicable, and such policies shall be primary
over any other insurance carried by the additional insured's, except for Workers
Compensation and Professional Liability. It is agreed that the primary insurance
coverage with respect to the Engineer, or if excess, shall stand in an unbroken
chain of coverage regardless of the Design-Builder's scheduled underlying
coverage. Any insurance or self-insurance maintained by the Engineer and their
directors, officers, employee, agents and volunteers shall be primary to that of
any maintained insurance or self-insurance coverage by the Design-Builder.
23
11.4 OWNER'S LIABILITY INSURANCE The Owner shall be responsible for obtaining
and maintaining its own liability insurance. Insurance for claims arising out of
the performance of this Agreement may be purchased and maintained at the Owner's
discretion. The Owner shall provide the Design-Builder with a certificate of
insurance at the request of the Design-Builder.
11.5 INSURANCE TO PROTECT PROJECT
11.5.1 The Design-Builder shall at its expense procure "All Risk" Builder's Risk
and Machinery Breakdown Insurance. Such "All Risk" Builder's Risk Insurance
shall be in a form acceptable to the Owner upon the Project for the cost of
replacement at the time of any stated loss. This insurance shall include the
Owner and the Design Builder as a Named Insured and the Financing Parties, the
Engineer, Subcontractors, Material Suppliers, and Sub-subcontractors as
Additional Insureds. This insurance be written on a replacement cost value basis
and shall include "all risk" insurance for physical loss or damage including
without duplication of coverage at least: theft, vandalism, malicious mischief,
transit, materials stored off site, collapse, false-work, temporary buildings,
debris removal, flood, earthquake, workmanship or material. If also requested by
the Owner, the Design-Builder shall obtain a Builder's Risk delay in start-up
and testing policy that covers plant operations for a stated period of time. The
Design-Builder may increase limits of coverage, if necessary, to reflect
estimated replacement cost at the discretion of the Design-Builder. The
insurance policy shall be written without a co-insurance clause. The
Design-Builder and Owner shall share the responsibility for any deductible
amounts at a 50/50 rate.
11.5.2 If necessary and at the Owner's expense, the Owner shall purchase and
maintain insurance to protect the Owner, the Design-Builder, the Engineer,
Subcontractors, and Sub-subcontractors against loss of use of the Owner's
property due to those perils insured pursuant to Paragraph 11.5. Such policy
will provide coverage for expediting expenses of materials, continuing overhead
of the Owner and the Design-Builder, the Engineer, Subcontractors, Material
Suppliers and Sub-subcontractors, necessary labor expense including overtime,
loss of income by the Owner and other determined exposures. Exposures of the
Owner, the Design-Builder, the Engineer, Subcontractors and Sub-subcontractors,
shall be determined by mutual agreement with separate limits of coverage fixed
for each item.
11.5.3 The Owner and Design-Builder shall provide each other with copies of all
insurance policies before an exposure to loss may occur. Copies of any
subsequent endorsements shall be furnished as necessary. The cost of any
insurance shall be added to the Cost of the Work pursuant to Article 8, and the
GMP shall be increased by Change Order.
11.6 PROPERTY INSURANCE LOSS ADJUSTMENT
11.6.1 Any insured loss shall be adjusted with the Owner and the Design-Builder
and losses exceeding $500,000 shall be made payable to the agent for the
Financing Parties with losses below $500,000 (not to exceed $1,000,000 in any
one year) made payable to the Design-Builder as trustee for the insureds, as
their interests may appear, subject to any applicable mortgagee clause.
11.7 WAIVER OF SUBROGATION
11.7.1 The Owner and the Design-Builder waive all rights against each other, the
Engineer, and any of their respective employees, agents, consultants,
Subcontractors, Sub-subcontractors and Financing Parties for damages covered by
the insurance provided pursuant to Paragraph 11.5 to the extent they are covered
by that insurance, except such rights as they may have to the proceeds of such
insurance held by the Owner and the Design-Builder as trustees. The
Design-Builder shall require similar waivers from the Engineer and all
Subcontractors, and shall require each of them to include similar waivers in
their sub-subcontracts and consulting agreements.
11.7.2 The Owner waives subrogation against the Design-Builder, the Engineer,
Subcontractors, Sub-subcontractors and Financing Parties on all property and
consequential loss policies carried by the Owner on adjacent properties and
under property and consequential loss policies purchased for the Project after
its completion.
24
11.7.3 All policies except worker's compensation shall be endorsed to state that
the carrier waives any right to subrogation against the Design-Builder, the
Engineer, Subcontractors or Sub-subcontractors.
11.8 EFFECTIVENESS OF INSURANCE The Design-Builder acknowledges that the
insurance coverages it is required to maintain pursuant to the terms of Article
11 are effective as of the date of this Agreement.
11.9 MUTUAL WAIVER OF CONSEQUENTIAL DAMAGES The Owner and the Design-Builder
agree to waive all claims against the other for all consequential damages that
may arise out of or relate to this Agreement. The Owner agrees to waive damages
including but not limited to the Owner's loss of use of the Property, all rental
expenses incurred, loss of services of employees, or loss of reputation. The
Design-Builder agrees to waive damages including but not limited to the loss of
business, loss of financing, principle office overhead and profits, loss of
profits not related to this Project, or loss of reputation. This paragraph shall
not be construed to preclude contractual provisions for liquidated damages when
such provisions relate to direct damages only. The provisions of this paragraph
shall govern the termination of this Agreement and shall survive such
termination.
11.10 LIMITATION OF LIABILITY; COMPLETION GUARANTEE
11.10.1 INSURED CLAIM The Design Builder shall not be liable under this
Agreement to pay any amount in excess of the policy coverage limits in respect
of any claim that is covered by any insurance policy required to be maintained
under Section 11.2. All insurance policies provided pursuant to this Agreement
shall provide "industry standard" insured coverages for liability and toss, as
and to the extent provided for in Section 11.2.
11.10.2 LIMITATION FOR ENGINEER'S LIABILITY To the extent that any obligation or
liability of the Design-Builder (other than its obligation to complete the Work
as set forth in Section 11.10.3) arising in connection with the Project or the
Work is attributable to the Engineer, the Design-Builder's obligation to the
Owner shall not exceed the cumulative total amount of ten million dollars
($10,000,000) less the aggregate amount of Liquidated Damages paid by the
Design-Builder to the Owner pursuant to Section 7.5.1 hereof in respect of
delays attributable to the Engineer; provided that such limitation shall not bar
or reduce any liability of Design-Builder or Engineer that is covered by
insurance to the extent of such coverage.
11.10.3 COMPLETION GUARANTEE Notwithstanding anything to the contrary in this
Agreement (including Section 11.10.1 and 11.10.2), Design-Builder hereby agrees
to complete the Work in all material respects in accordance with the terms of
the Contract Documents per the Scope of Services as provided in Exhibit D. If
and to the extent that Design-Builder fails to complete the Work in accordance
with the terms and conditions contained herein, then Design-Builder shall be
responsible for all of Owner's costs arising out of such failure (including any
re-work or cure work necessary to remedy any such construction deficiencies) up
to one hundred percent (100%) of the GMP as set forth in Section 3.2.1.1.
11.10.4 BONDING Performance and Payment Bonds shall be required of the
Design-Builder by the Owner. Such bonds shall be issued by a surety licensed in
the state of the location of the Project and must be acceptable to the Owner.
Such Performance Bond shall be issued in the penal sum of one-hundred percent
(100%) of the GMP. Such Performance Bond shall cover the cost to complete the
Work, but shall not cover any obligations or liabilities of the Design-Builder
covered by the insurance policies required to be maintained by the
Design-Builder pursuant to the terms of this Agreement (whether or not such
insurance is in an amount sufficient to cover such damages) and shall be subject
to the limits contained in this Section 11.10 (including Section 11.10.2). The
penal sum of the Payment Bond may or may not be equal the penal sum of the
Performance Bond as determined by the Owner.
11.10.5 EFFECT OF FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT Notwithstanding
anything to the contrary contained in this Agreement, the limitations on the
liability of the parties to this Agreement contained herein shall not apply to
any loss or damage arising out of or connected to a party's fraud, gross
negligence or willful misconduct.
25
11.11 PERFORMANCE GUARANTEE AND DAMAGES
11.11.1 WARRANTY The Design-Builder hereby warrants, subject to Subparagraphs
11.10.2, that the Plant shall meet the Performance Guarantees, as set forth at
Exhibit H attached hereto, during the Performance Test period described at
Exhibit G hereto ("Performance Test"), PROVIDED, that the Owner has not taken
any action, or failed to take any action, with respect to design or construction
of the Plant that would cause the Plant not to meet the Performance Guarantees.
THE WARRANTIES SET FORTH IN THIS ARTICLE ARE THE ONLY WARRANTIES MADE BY
DESIGN-BUILDER, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY OF FITNESS FOR A PARTICULAR PURPOSE. Design-Builder acknowledges
that it has no other warranties or rights of any kind with respect to the
design, construction or operation of the Plant except as set forth in the Prime
Contract.
11.11.2 PREPARATION FOR AND PERFORMANCE OF PERFORMANCE TEST The Design-Builder
shall advise Engineer when the Plant is ready for the Performance Test. For
purposes of this Section 11.11.2, the Plant will be considered "ready" upon
Design-Builder and Owner's delivery to Engineer of the Certificate of Mechanical
Completion, signed by Owner and Design-Builder, as provided for under the terms
of this Agreement. As soon as the Certificate of Mechanical Completion is
delivered to the Engineer, as provided for in this Section 11.11.2, the Owner
and Engineer shall commence performance of their respective obligations in
conducting the Performance Test.
11.11.3 REMEDY THE REMEDIES SET FORTH IN THIS ARTICLE 11.11.3 AND IN EXHIBIT G
SHALL BE THE OWNER'S SOLE AND EXCLUSIVE REMEDIES FOR BREACH OF WARRANTY. The
Design-Builder shall have no liability for any defect or deterioration which
results from failure of Owner to provide any feedstock, utilities, or other
supplies, services or conditions specified in this Agreement, which are not
within the Design-Builder's scope of work, force majeure, improper operation or
maintenance that is contrary to the Design-Builder's direction, foreign
substance or impurity introduced into the molecular sieve, or any other matter
not within the Design-Builder's control. If, for any reason, the Design-Builder
is determined to be in breach of the warranties set forth under this Article
11.11.1, Design-Builder shall pay Owner the amount of liquidated performance
damages determined in accordance with Exhibit H; provided, that the aggregate
amount of performance liquidated damages payable by the Design-Builder pursuant
to Exhibit H shall not exceed seven million six hundred forty-one thousand eight
hundred and five dollars ($7,641,805).
11.11.4 FAILURE TO REACH FINAL ACCEPTANCE FOR REASONS BEYOND DESIGN-BUILDER'S
CONTROL if, for any reason, Owner fails to permit Design-Builder and Engineer
access to the Plant after delivery of the Certificate of Mechanical Completion,
as set forth herein, in order to permit Design-Builder to complete all of its
rights and obligations under Exhibits G and H hereto and such failure continues
for an aggregate of more than thirty (30) days, or if the Design-Builder is
prevented from completing the Performance Test(s) for reasons beyond
Design-Builder's control under this Agreement, and such prevention of
performance continues beyond thirty (30) days from Mechanical Completion, then
the Performance Tests shall be deemed to have been successfully completed on the
thirtieth (30th) aggregate day that such access is denied or performance
prevented by Owner, and Design-Builder shall thereafter have no obligation or
liability of any kind to Owner under this Article 11.11
ARTICLE 12 - SUSPENSION AND TERMINATION OF THE AGREEMENT AND OWNER'S RIGHT TO
PERFORM DESIGN-BUILDER'S RESPONSIBILITIES
12.1 SUSPENSION BY THE OWNER FOR CONVENIENCE
26
12.1.1 The Owner may order the Design-Builder in writing to suspend, delay or
interrupt all or any part of the Work without cause for such period of time as
the Owner may determine to be appropriate for its convenience.
12.1.2 Adjustments caused by suspension, delay or interruption shall be made for
increases in compensation for the Design-Builder's Fee and/or the Date of
Substantial Construction Completion and/or the Date of Final Construction
Completion. No adjustment shall be made if the Design-Builder is or otherwise
would have been responsible for the suspension, delay or interruption of the
Work, or if another provision of this Agreement is applied to render an
equitable adjustment.
12.2 TERMINATION BY OWNER If the Owner terminates this Agreement, the Owner
shall pay the Design-Builder for all costs associated with the Work per Article
7.0. In addition, the Design-Builder shall be paid an amount as set forth below:
.1 If the Owner terminates this Agreement and selects another qualified
Design-Builder and/or Contractor with a license to conduct business
within the state; the Owner shall pay the Design-Builder for all
Services as set forth above and a premium of five million dollars,
($5,000,000).
.2 The Owner shall also pay to the Design-Builder fair compensation,
either by purchase or rental at the election of the Owner, for all
equipment retained. The Owner shall assume and become liable for
obligations, commitments and unsettled claims that the Design-Builder
has previously undertaken or incurred in good faith in connection with
the Work or as a result of the termination of this Agreement. As a
condition of receiving the payments provided under this Article 12, the
Design-Builder shall cooperate with the Owner by taking all steps
necessary to accomplish the legal assignment of the Design-Builder's
rights and benefits to the Owner, including the execution and delivery
of required papers.
.3 Subject to Section 6.4, the Owner shall have the right to terminate
this Agreement if the Design-Builder fails to perform any of its
material obligations under this Agreement (breach of contract) and such
failure continues for 45 days after receipt of written notice from the
Owner regarding such failure. In connection with a termination under
this Subparagraph, the Owner shall not be required to pay the amount
set forth in Subparagraph 12.2.1 above.
Notwithstanding anything to the contrary contained herein, nothing in this
Article shall limit any rights or remedies the Owner may have to terminate this
Agreement in the event of a material and uncured breach by the Design-Builder
hereunder that the Owner may have under applicable laws.
12.3 TERMINATION BY THE DESIGN-BUILDER
12.3.1 Upon five (5) days' written notice to the Owner, the Design-Builder may
terminate this Agreement for any of the following reasons:
.1 if the Work has been stopped for a sixty (60) day period
a. under court order or order of other governmental
authorities having jurisdiction; or
b. as a result of the declaration of a national emergency or
other governmental act during which, through no act or fault
of the Design-Builder, materials are not available;
.2 if the Work is suspended by the Owner for sixty (60)
consecutive days;
.3 if the Owner fails to furnish reasonable evidence that sufficient
funds are available and committed for the entire cost of the Project in
accordance with Subparagraph 4.1.3 of this Agreement.
27
12.3.2 If the Owner has for thirty (30) days failed to pay the Design-Builder
pursuant to Subparagraph 10.1.2, the Design-Builder may give written notice of
its intent to terminate this Agreement. If the Design-Builder does not receive
payment within five (5) days of giving written notice to the Owner, then upon
five (5) days' additional written notice to the Owner, the Design-Builder may
terminate this Agreement.
12.3.3 Upon termination by the Design-Builder in accordance with this
Subparagraph, the Design-Builder shall be entitled to recover from the Owner
payment for all Work executed and for all proven loss, cost or expense in
connection with the Work, plus all demobilization costs and reasonable damages.
In addition, the Design-Builder shall be paid an amount calculated as set forth
either in Subparagraph 12.2.1 or 12.2.2, depending on when the termination
occurs.
ARTICLE 13 - DISPUTE RESOLUTION
13.1 WORK CONTINUANCE AND PAYMENT Unless otherwise agreed in writing, the
Design-Builder shall continue the Work and maintain the approved schedules
during all dispute resolution proceedings. If the Design-Builder continues to
perform, the Owner shall continue to make payments in accordance with the
Agreement.
13.2 [RESERVED]
13.3 DISPUTE RESOLUTION If a dispute arises out of or relates to this Agreement
or its breach, the parties shall submit the dispute to the dispute resolution
process set forth in Exhibit A to this Agreement.
13.4 MULTIPARTY PROCEEDING The parties agree that all parties necessary to
resolve a claim shall be parties to the same dispute resolution proceeding.
Appropriate provisions shall be included in all other contracts relating to the
Work to provide for the consolidation of such dispute resolution proceedings.
13.5 COST OF DISPUTE RESOLUTION The prevailing party in any dispute arising out
of or relating to this Agreement or its breach that is resolved by the dispute
resolution process set forth in Exhibit A to this Agreement shall be entitled to
recover from the other party those reasonable attorneys fees, costs and expenses
incurred by the prevailing party in connection with such dispute resolution
process after direct discussions and mediation.
13.6 LIEN RIGHTS Nothing in this Article shall limit any rights or remedies not
expressly waived by the Design-Builder which the Design-Builder may have under
lien laws.
ARTICLE 14 - MISCELLANEOUS PROVISIONS
14.1 ASSIGNMENT Neither the Owner nor the Design-Builder shall assign its
interest in this Agreement without the written consent of the other except as to
the assignment of proceeds. The terms and conditions of this Agreement shall be
binding upon both parties, their partners, successors, assigns and legal
representatives. Neither party to this Agreement shall assign the Agreement as a
whole without written consent of the other except that the Owner may assign the
Agreement to a wholly-owned subsidiary of the Owner when the Owner has fully
indemnified the Design-Builder or to any Financing Parties providing
construction financing for the Project as long as the assignment is no less
favorable to the Design Builder than this Agreement. In the event of such
assignment, the Design-Builder shall execute all consents reasonably required by
any Financing Parties. In such event, the wholly-owned subsidiary or lender
shall assume the Owner's rights and obligations under the Contract Documents. If
either party attempts to make such an assignment, that party shall nevertheless
remain legally responsible for all obligations under the Agreement, unless
otherwise agreed by the other party.
14.2 GOVERNING LAW This Agreement shall be governed by the law in effect at the
location of the Project.
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14.3 SEVERABILITY The partial or complete invalidity of any one or more
provisions of this Agreement shall not affect the validity or continuing force
and effect of any other provision.
14.4 NO WAIVER OR PERFORMANCE The failure of either party to insist, in any one
or more instances, on the performance of any of the terms, covenants or
conditions of this Agreement, or to exercise any of its rights, shall not be
construed as a waiver or relinquishment of such term, covenant, condition or
right with respect to further performance.
14.5 TITLES AND GROUPINGS The titles given to the articles of this Agreement are
for ease of reference only and shall not be relied upon or cited for any other
purpose. The grouping of the articles in this Agreement and of the Owner's
specifications under the various headings is solely for the purpose of
convenient organization and in no event shall the grouping of provisions, the
use of paragraphs or the use of headings be construed to limit or alter the
meaning of any provisions.
14.6 JOINT DRAFTING The parties to this Agreement expressly agree that this
Agreement was jointly drafted, and that both had opportunity to negotiate its
terms and to obtain the assistance of counsel in reviewing its terms prior to
execution. Therefore, this Agreement shall be construed neither against nor in
favor of either party, but shall be construed in a neutral manner.
14.7 RIGHTS AND REMEDIES The parties' rights, liabilities, responsibilities and
remedies with respect to this Agreement, whether in contract, tort, negligence
or otherwise, shall be exclusively those expressly set forth in this Agreement.
14.8 FINANCING PARTIES' REQUIREMENTS The Design-Builder acknowledges that the
Owner or an affiliate thereof may borrow certain funds from the Financing
Parties for the construction of the Project and that, as a condition to making
loans to the Owner or such affiliate, the Financing Parties may from time to
time require certain documents from, and agreements by, the Design-Builder. In
connection therewith, the Design-Builder agrees to furnish to the Financing
Parties such written information, certificates, copies of invoices and receipts,
lien waivers and other like documents as the Financing Parties may reasonably
request. Upon the request of the Financing Parties (but in connection with the
occurrence of the financial closing), the Design-Builder shall state in writing
whether or not it is satisfied with Owner's performance to that date. Without
limiting the generality of the foregoing, the Design-Builder shall execute, on
or before financial closing, a consent and a legal opinion (it being
acknowledged that such legal opinion shall address the due organization of the
Design-Builder, the due authorization, execution and delivery of this Agreement
and the enforceability of this Agreement against the Design-Builder) reasonably
satisfactory to the Design-Builder and the Financing Parties.
14.9 OTHER PROVISIONS
None.
ARTICLE 15 -- OTHER DOCUMENTS
As defined in Subparagraph 2.4.1, the following Exhibits are a part of this
Agreement:
EXHIBIT A: Dispute Resolution Procedures.
EXHIBIT B: Current Time and Material Cost worksheets, as amended every
July.
EXHIBIT C: Project Development Agreement between Design-Builder and
Engineer, dated July 15, 2003.
EXHIBIT D: Design-Builder's Scope of Services.
EXHIBIT E: Amended and Restated Phase 1 Design-Build Agreement.
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EXHIBIT F: RESERVED
EXHIBIT G: Performance Test Protocols.
EXHIBIT H: Performance Guarantees.
EXHIBIT 1: [Reserved]
EXHIBIT J Design-Builder Permits.
EXHIBIT K Owner Permits.
EXHIBIT L-1 Progress Payment Conditional Lien Waiver.
EXHIBIT L-2 Final Payment Conditional Lien Waiver.
EXHIBIT L-3 Final Payment Unconditional Lien Waiver.
EXHIBIT M Material Items Inconsistent with Selection Criteria.
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THIS AGREEMENT IS ENTERED INTO AS OF THE DATE FIRST SET FORTH
ABOVE AND BY THE AUTHORIZED INDIVIDUALS FOR THE COMPANIES
LISTED BELOW.
OWNER:
PACIFIC ETHANOL MADERA LLC
BY: /s/ ▇▇▇▇ ▇▇▇▇▇▇ BY: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------- -----------------------------
PRINT NAME: ▇▇▇▇ ▇▇▇▇▇▇ PRINT NAME: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
PRINT TITLE: President PRINT TITLE: Secretary
ATTEST: ▇▇▇▇▇▇▇ ▇▇▇▇▇
DESIGN-BUILDER:
▇.▇. ▇▇▇▇▇ CO.
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ BY: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------- -----------------------
PRINT NAME: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ PRINT NAME: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
PRINT TITLE: President & CEO PRINT TITLE: Vice President
ATTEST: ▇▇▇▇▇▇▇ ▇▇▇▇▇
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