EXHIBIT 2.5.4
================================================================================
MASTER SERVICES AGREEMENT
BY AND BETWEEN
WORLDCOM NETWORK SERVICES, INC.
AND
MFS NETWORK TECHNOLOGIES, INC.
CONTRACT NO. C-6734
================================================================================
CONFIDENTIAL
TABLE OF CONTENTS
PAGE
----
ARTICLE 1. TERM...............................................................6
1.1 Term................................................6
1.2 Termination.........................................6
1.3 Contract Year.......................................6
ARTICLE 2. CONTRACTOR SERVICES................................................6
2.1 Work................................................6
2.2 Work Orders.........................................8
2.3 Other Work..........................................9
2.4 Refusal of Work....................................10
ARTICLE 3. PERFORMANCE OF WORK...............................................11
3.1 Contractor's Forces................................11
3.2 Subcontractors.....................................12
3.3 Contract Documents.................................13
3.4 Materials..........................................14
3.5 Permits and Fees...................................16
3.6 Progress and Procedure.............................17
3.7 Changes............................................20
3.8 Commencement and Completion of Work................21
3.9 As-Built Drawings..................................22
3.10 Specifications and Standards.......................22
3.11 Lien Waivers.......................................23
3.12 Timing/Delays......................................23
3.13 Corrective Action Plan.............................24
ARTICLE 4. PAYMENT AND COSTS.................................................24
4.1 Payment............................................24
4.2 Cost Control.......................................30
4.3 Most Favored Nation................................31
4.4 Independent Contractor.............................31
4.5 Accounting System..................................32
4.6 Progress Payment...................................33
4.7 Late Payment.......................................35
CONFIDENTIAL
Page 1
4.8 Annual and Aggregate Project Sum...................35
4.9 Commitment Fulfilled...............................36
4.10 Contractor's Fee Trueup............................36
4.11 Able Telcom's Promissory Note......................37
ARTICLE 5. OWNER'S RESPONSIBILITIES..........................................38
5.1 Authorized Representative..........................38
5.2 Provision of Data..................................38
5.3 Owner's Own Forces.................................39
5.4 Prompt Reply.......................................39
5.5 Failure to Provide Information.....................39
ARTICLE 6. OWNER'S AND CONTRACTOR'S REPRESENTATIONS..........................39
6.1 Contractor Representations and Covenants...........39
6.2 Owner Representations and Covenants................40
ARTICLE 7. INSURANCE AND BONDS .............................................40
7.1 Worker's Compensation and Employer's Liability.....41
7.2 Builder's Risk.....................................43
7.3 Errors and Omissions...............................44
7.4 Railroad Protective................................44
7.5 Insurance Required of Subcontractors...............44
7.6 Additional Insured.................................45
7.7 Evidence of Coverage...............................45
7.8 Bonds..............................................46
ARTICLE 8. DEFAULT AND TERMINATION..........................................47
8.1 Default............................................47
8.2 Dispute Resolution / Arbitration...................50
ARTICLE 9. INDEMNIFICATION AND LIABILITY ...................................52
9.1 Indemnification by Contractor......................52
9.2 Indemnification by Owner...........................53
9.3 Notice of Claims...................................53
9.4 Limitation of Liability............................54
CONFIDENTIAL
Page 2
ARTICLE 10. WARRANTY.........................................................54
10.1 Warranty...........................................54
10.2 Free from Defects..................................55
10.3 No Other Warranties................................55
ARTICLE 11. HAZARDOUS MATERIALS AND CONCEALED CONDITIONS.....................55
11.1 Hazardous Materials................................55
11.2 Concealed Conditions...............................56
ARTICLE 12. MISCELLANEOUS...................................................57
12.1 Title..............................................57
12.2 Assignment.........................................57
12.3 Severability.......................................57
12.4 Waiver.............................................57
12.5 Notices............................................58
12.6 Confidentiality....................................59
12.7 Counterparts.......................................60
12.8 No Construction Against Drafter....................61
12.9 Course of Dealing..................................61
12.10 Survival...........................................61
12.11 Governing Law......................................61
12.12 Entire Agreement...................................61
EXHIBITS
EXHIBIT A - Current Projects........................................A-1
EXHIBIT B - Work Orders.............................................B-1
EXHIBIT C - Agreements for Other Work...............................C-1
EXHIBIT D - Engineering Services Rate Schedule......................D-1
EXHIBIT E - Change Order Form.......................................E-1
EXHIBIT F - Certificate Of Completion...............................F-1
EXHIBIT G - Contractor's Labor Policies.............................G-1
CONFIDENTIAL
Page 3
EXHIBIT H - Subcontract Terms & Conditions..........................H-1
EXHIBIT I - Professional Services Agreement........................I-1
EXHIBIT J - Invoice Form............................................J-2
CONFIDENTIAL
Page 4
MASTER SERVICES AGREEMENT
CONTRACT NO. C-6734
THIS Master Services Agreement ("Agreement") is made as of this second
day of July, 1998 by and between WORLDCOM NETWORK SERVICES, INC., a Delaware
corporation with offices at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
including its affiliates and subsidiaries as appropriate throughout
(collectively referred to herein as "Owner") and MFS NETWORK TECHNOLOGIES, INC.,
a Delaware corporation with offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
▇▇ ▇▇▇▇▇, hereinafter called the "Contractor."
WITNESSETH:
WHEREAS, the Owner is engaged in the business of providing
telecommunications services and intends to obtain services for the design,
engineering, procurement, construction, operation, maintenance, relocation and
replacement of various telecommunications network projects within the United
States (each, a "Project", together, "Projects"); and
WHEREAS, Contractor is engaged in the business of providing design,
engineering, procurement, construction, maintenance, relocation and replacement
of telecommunications facilities and desires to design, engineer, procure,
construct, maintain, relocate and replace certain of the Owner's Projects; and
WHEREAS, Owner desires Contractor to perform such work as is deemed
necessary by Owner to design, engineer, procure, construct, maintain, relocate
and/or replace each Project as the same shall be agreed by and between Owner and
Contractor; and
CONFIDENTIAL
Page 5
WHEREAS, Owner and Contractor desire to establish the general terms and
conditions under which each Project will be performed and to establish the
responsibilities of each party hereto for each Project; and
WHEREAS, Owner desires to engage Contractor for an agreed term and
commitment for Projects as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and other
considerations contained herein, the parties hereto agree as follows:
ARTICLE 1. TERM
1.1 TERM. The term of this Agreement shall be for a period of five (5)
years effective on the date of execution hereof (hereinafter the "Term").
1.2 TERMINATION. This Agreement may be terminated at any time upon the
mutual written agreement of the parties. This Agreement may also be terminated
pursuant to Article 8.
1.3 CONTRACT YEAR. A "Contract Year" shall be any twelve month period
beginning on the date of execution of the Agreement as first written above or
any anniversary date thereof.
ARTICLE 2. CONTRACTOR SERVICES
2.1 WORK. The Contractor agrees to provide, as required by Owner, all
the labor, equipment, materials and expertise and to do all things necessary for
the proper performance and completion of each Project (the "Work"). The Work,
may, as required by Owner, include, but is not limited to, Local Network
Projects, Long Haul Projects, Engineering Services and Other Work all as
hereinafter defined.
CONFIDENTIAL
Page 6
2.1.1 LOCAL NETWORK PROJECTS. Local Network Projects may, as
required by Owner, include but are not limited to, design, engineering, project
management, material procurement, inspection, acceptance testing and
construction of local telecommunications network infrastructure which may
consist of both inside and outside plant work, and initial building laterals to
provide intracity or intraexchange telecommunications services to customers
within a local loop (hereinafter referred to as "Local Network Projects"). Local
Network Projects do not include construction of isolated laterals or points of
presence ("POPs").
2.1.2 LONG HAUL PROJECTS, may, as required by Owner, include
but are not limited to, design, engineering, project management, material
procurement, inspection, acceptance testing and construction of long distance
telecommunications networks which may consist of both inside and outside plant
work, terminal and regen/amplifier facility construction or expansion to provide
intercity, interexchange or interLATA telecommunications services (hereinafter
referred to as "Long Haul Projects.").
2.1.3 ENGINEERING SERVICES. Engineering Services may, as
required by Owner, include but are not limited to, the design, engineering and
procurement of transmission facilities, spaces, nodes and central office
equipment related to Local Network Projects and other special engineering
projects or research. Central office equipment includes, but is not limited to,
optical-electric equipment, cross connect systems, voice and data switching
systems, DC power systems, cabling, racking and ancillary equipment ("Central
Office Equipment"). Due to the unique nature of such Engineering Services, Owner
and Contractor agree that such services shall be performed at the actual direct
salary, subject to adjustments as set forth in Article 4, plus the labor burden
factor set forth in Exhibit D attached
CONFIDENTIAL
Page 7
hereto and incorporated herein which shall include applicable overhead and
benefits. The parties agree that Contractor may, not more often than annually,
update the labor burden factor for Engineering Services based upon changes in
Contractor's actual costs for providing such services provided that Owner is
given written notice and a written justification of any change in such labor
burden factor. The charges for Engineering Services set forth herein shall be
considered Reimbursable Costs as defined in Article 4 hereof.
2.1.4 CURRENT PROJECTS. Owner and Contractor agree that all
work or projects being performed under a contract between Contractor and Owner
as of the date of this Agreement which work has been performed after the
execution date of this Agreement, including but not limited to those Projects
set forth in Exhibit A, shall be treated in accordance with the terms and
conditions of this Agreement. The parties agree that any commitments concerning
volume of work or annual payments in any such contracts shall immediately become
void and of no effect due to the Annual Project Sum and Aggregate Project Sum
commitments contained in Article 4 hereof.
2.2 WORK ORDERS. The Work shall be set forth in a detailed Work Order
(each, "Work Order" or, together "Work Orders"), for each individual Local
Network Project, Long Haul Project, or Engineering Services Project executed by
Owner (or Owner's affiliate or subsidiary as appropriate) and Contractor. Where
appropriate, Owner and Contractor will enter into a Work Order to develop a
description of Work to be performed, Project Staffing Plan, Project Budget and
Project Schedule for Project development. No Work Order shall be effective nor
shall Owner or Contractor incur any liability hereunder unless the Work Order is
executed by duly authorized representatives of each party hereto.
CONFIDENTIAL
Page 8
2.2.1 Each Work Order shall be substantially in the form of
and shall contain the information contained in the Sample Work Order attached
hereto as Exhibit B. At a minimum, each Work Order shall contain the Project
name, description of the Work to be performed, Project Staffing Plan (as
hereafter defined), Project budget, Project schedules and a list of work to be
subcontracted. Upon execution of a Work Order it shall become a part of and
shall be governed by this Agreement. Each Work Order shall be labeled so that,
for example, the first executed Work Order may be Work Order No. C-6734.001, the
second Work Order shall be Work Order No. C-6734.002 and so on.
2.3 OTHER WORK. In addition to Local Network Projects, Long Haul
Projects and Engineering Services, Owner may enter into agreements with
Contractor to provide, among other things, all the labor, equipment, materials
and expertise and to do all things necessary for the proper performance and
completion of other Projects. Such other Projects may include but are not
limited to the engineering, procurement or construction of telecommunications
networks or facilities or services required for the maintenance, expansion or
operation of either Local Network Projects or Long Haul Projects or other
Projects not specifically defined in this Agreement, hereinafter collectively
referred to as "Other Work." The Contractor may from time to time bring projects
to the attention of Owner whereby Contractor acting on behalf of a third party
right-of-way or facility owner is offering for sale or lease telecommunications
facilities. Should Owner elect to enter into an agreement with Contractor for
such facilities such agreement shall not be subject to this agreement.
2.3.1 The details for all Other Work shall be set forth in an
agreement which shall be executed by Owner (or Owner's affiliate or subsidiary
as appropriate) and Contractor. No agreement
CONFIDENTIAL
Page 9
for Other Work shall be effective nor shall Owner or Contractor incur any
liability hereunder unless the agreement is executed by duly authorized
representatives of each party hereto.
2.3.2 Each agreement for Other Work shall become a part of and
shall be governed by this Agreement unless expressly stated in such agreement
for Other Work. In the event of a conflict between this Agreement and an
agreement for Other Work, the agreement for Other Work shall prevail.
Notwithstanding the foregoing, all payments made or due by Owner to Contractor
pursuant to an agreement for Other Work without regard to the terms of such
agreement for Other Work, shall become part of the Aggregate Project Sum as
defined in Article 4. Each agreement for Other Work shall be labeled in the same
manner as Work Orders.
2.3.3 Owner agrees that Contractor shall have the opportunity
to bid on all Local or Long Haul Projects not assigned to Contractor via a Work
Order and offered by Owner for bidding during the Term.
2.4 REFUSAL OF WORK.
2.4.1 During each Contract Year, Contractor shall accept and
execute all Work Orders offered to Contractor by Owner hereunder without regard
to quantity, schedule or cost throughout the Term until such time as the Annual
Project Sum reaches One-hundred Thirty Million Dollars ($130,000,000.00). If
Contractor refuses or fails to accept any Work Order prior to such time, the
value of the Work Order (including the applicable Contractor's Fee) shall be
added as a credit to the Aggregate Project Sum as if such Work Order had been
accepted and performed by Contractor pursuant to the terms of this Agreement.
For the purpose of determining whether such a credit is due, the Annual Project
Sum shall be as calculated at the time Contractor declines such Work Order.
CONFIDENTIAL
Page 10
2.4.2 The Owner agrees to award Contractor a minimum volume of
seventy-five percent (75 %) of all outside plant work related to Owner's Local
Network Projects.
2.4.3 In the event the Annual Project Sum for all Work Orders
and agreements for Other Work reaches One Hundred Thirty Million Dollars
($130,000,000.00) in any year of the Term and Owner offers a Long Haul Project,
Engineering Services or Other Work to Contractor, Contractor may decline to
accept such additional Work, without penalty.
ARTICLE 3. PERFORMANCE OF WORK
3.1 CONTRACTOR'S FORCES. The Contractor shall perform project
management, supervisory functions, contract and document preparation, drafting,
material procurement, and all portions of the Work which are similar to those
stated herein with its own employees except as mutually agreed by Owner and
Contractor.
3.1.1 Owner and Contractor acknowledge that as part of the
consideration given by Owner to Contractor hereunder, Owner is relying on and
expects to continue to rely upon the high level of experience, skill and
expertise existing in the personnel currently in Contractor's employ. Contractor
shall staff Key Positions only with qualified persons with prior experience in
the position to be filled. For purposes of this Agreement, "Key Positions" are
defined as Project Manager, Construction Manager, Business Manager and Contract
Manager. However, Contractor may propose and Owner may reasonably approve the
use of individuals having no prior experience in a Key Position.
3.1.2 Contractor agrees to provide Owner with a detailed plan
for the staffing of each Project (hereinafter the "Project Staffing Plan") as
part of each Work Order. Each Project Staffing Plan
CONFIDENTIAL
Page 11
shall identify the individuals who will fill Key Positions and other positions
which will be required for the Project. Contractor shall provide Owner with
relevant employee information upon request. Contractor shall follow Owner's
reasonable recommendations concerning the Project Staffing Plan for each Work
Order. All unscheduled or voluntary changes by Contractor in the staffing of Key
Positions or other Contractor employees on a Project shall be subject to the
prior written approval of Owner, which shall not be unreasonably withheld.
3.1.3 Owner shall have the right to request in writing that
Contractor remove any of its employees from any Project at any time provided
such request is reasonable, lawful and nondiscriminatory. Contractor shall
comply with such request immediately upon receipt of the written request from
Owner.
3.2 SUBCONTRACTORS. Unless specifically permitted in a Work Order or
agreement for Other Work, Owner and Contractor agree that Contractor shall
perform all actual construction for all Projects and Work performed hereunder
with unaffiliated third party contractors hereinafter referred to as
"Subcontractors".
3.2.1 As part of the Work performed under a Work Order or
agreement for Other Work, the Contractor shall develop, a list of qualified
bidders for each Project and establish bidding schedules. The Owner shall, upon
written notice to Contractor, have the right, in its sole discretion, to review,
approve, disapprove, add to or delete from the list of bidders. Unless otherwise
stated in a Work Order or agreement for Other Work, the Contractor shall obtain
competitive bids from a minimum of three (3) bidders for each phase or portion
of work for a Project or obtain a written waiver of this requirement before
proceeding with less than three bids.
CONFIDENTIAL
Page 12
3.2.2 Upon the prior written request of Owner, Owner shall
have the option to pre-approve all bidding documents, addenda and other
documents related to the bidding process at any time prior to Contractor's award
of a subcontract.
3.2.3 The Contractor shall prepare a bid evaluation analyzing
all bids received for a Project and shall notify Owner regarding selection of
the successful bidder. The Contractor shall award the work to be subcontracted
to the lowest priced, qualified, responsive bidder unless written approval is
obtained from Owner approving an award on some other basis. The Owner shall have
the right, upon prior written notice to Contractor, to determine the successful
bidder for any Work subcontracted hereunder. In no event shall Contractor award
a contract to a bidder which exceed the limits set forth in Section 3.7.1 unless
approved in writing by Owner.
3.3 CONTRACT DOCUMENTS. The Contractor shall prepare all Subcontractor
related contracts for the Work (the "Contract Documents"). All Contract
Documents shall conform to all laws and requirements of any right-of-way
providers, permitting authorities and other requirements of the Work Order or
agreement for Other Work.
3.3.1 All Contract Documents shall include terms and
conditions attached hereto as Exhibit I (for Subcontractors) and Exhibit J (for
professional services). The content of such Contract Documents shall comply with
generally accepted industry standards. In no event shall any Contract Document
including but not limited to agreements with Subcontractors, expose Owner to any
premium payment for early completion of a Project by Subcontractor, costs for
Subcontractor errors, liquidated damages or other penalty payments of any kinds
without the prior written consent of Owner which may be withheld by Owner in its
sole discretion.
CONFIDENTIAL
Page 13
3.3.2 The Contractor shall report to Owner any error,
inconsistency or omission in the Contract Documents which may have a material
impact on any Project immediately upon discovery thereof.
3.3.3 Upon written notice to Contractor by Owner prior to
execution of the Contract Documents, Owner shall have the right to approve any
and all Contract Documents. Contractor shall provide Owner with copies of the
documents upon such request and, Owner shall have five (5) business days from
receipt thereof to approve or disapprove said documents. Unless Owner gives
Contractor written notice to the contrary, failure of Owner to approve or
disapprove the Contract Documents within such five day period shall be deemed
approval. Owner shall not be responsible for the completeness, accuracy or
context of the Contract Documents except where such completeness, accuracy or
context is affected by changes to Contract Documents directed, dictated or
otherwise made by Owner. Contractor shall use commercially reasonable efforts to
ensure that all disputes concerning errors, inconsistencies or omissions in the
Contract Documents shall be resolved in favor of Owner.
3.3.4 The Contractor shall maintain copies of all Contract
Documents at the site of each Project in good order and marked reasonably
current to record all changes made during the Work.
3.4 MATERIALS. The Contractor will buy on a competitive-bid basis from
the lowest priced, qualified, responsible provider, in accordance with the same
bidding procedure outlined in Section 3.2 hereof, all major items of
construction materials necessary for the Work. All anticipated purchases,
rentals or other contracts for material shall be described in the applicable
Work Order or agreement for Other Work and included in the appropriate budget
for each. Contractor its Subcontractors will only purchase and install materials
which conform to Owner's specifications which will be included in the
CONFIDENTIAL
Page 14
Work Order. For purposes of economy, Contractor may enter into volume purchase
agreements to purchase major material items, such as fiber optic cable, conduit,
manholes, handholes, duct and innerduct, to be used in multiple projects
provided that such volume purchase agreements are competitively bid at
reasonable intervals during the Term but in no event less than every 18 months.
Any material deviation from Owner's specifications included in the Work Order
must be approved in writing by Owner.
3.4.1 Notwithstanding anything herein to the contrary,
including but not limited to Article 4 hereof, Contractor shall order major
material items limited to fiber optic cable, manholes, duct, innerduct,
handholes, and conduit only as described in and budgeted for in an applicable
Work Order or agreement for Other Work. Contractor shall count all quantities
toward its own volume purchasing agreements with suppliers as appropriate.
Contractor shall reimburse to Owner as a credit, any such volume discounts
received by Contractor after billing. Owner shall receive all supplier
warranties and guarantees.
3.4.2 Owner hereby reserves the right to purchase or provide
any and all materials necessary for the Work if deemed necessary by Owner due to
its tax status, availability of surplus material already owned, ordered, or
purchased by Owner or the Contractor's inability to secure the materials by the
stated due date.
3.4.3 All materials purchases made hereunder, including
payments of Contractor's Fees shall be credited to the Aggregate Project Sum as
defined in Article 4. Notwithstanding the foregoing, the Contractor's fee shall
be reduced from 12% to 6% only for circumstances where the Owner reserves the
right to purchase material pursuant Subsection 3.4.2 above. This reduction in
CONFIDENTIAL
Page 15
Contractor's fee shall not apply anywhere else in this Agreement. Further,
materials moved from one Project to another Project will not be subject to a
second Contractor's Fee.
3.4.4 Contractor shall properly inspect, receive and handle
any materials ordered pursuant to this Article. For Engineering Services Central
Office Equipment projects, Contractor will be responsible for all material
handling and inventory control, will use off-site facilities for warehousing
services prior to the installation start date as designated by Owner; and will
minimize the amount of materials stored on site during the implementation of the
Project.
3.5 PERMITS AND FEES. As required by Owner and specified in the Work
Order, the Contractor shall secure on Owner's behalf and the Owner shall pay
for, as Reimbursable Costs, all permits and governmental fees, licenses and
inspections necessary for the proper execution and completion of the Work which
are customarily secured after execution of the Work Order and which are legally
required.
3.5.1 Where the local law at the site of the building requires
a Certificate or Statement of Occupancy the Contractor shall obtain and pay for
this Certificate and deliver it to the Owner. Any costs for this Certificate
shall be treated as a Reimbursable Cost pursuant to Article 4 hereof.
3.5.2 Contractor shall not enter into or accept any license
agreement, joint-use agreement, ordinance, resolution, franchise, or other
agreement for the use of public or private right-of-way with any federal, state,
local, public or private entity for any Project without the written approval of
Owner it being agreed that Owner or its duly authorized representation shall
execute any such agreements. Contractor shall immediately notify Owner if, or
when, it discovers any such agreement is required.
CONFIDENTIAL
Page 16
3.6 PROGRESS AND PROCEDURE. The Contractor shall, unless otherwise
stated in a Work Order or agreement for Other Work, follow these procedures;
3.6.1 The Contractor will maintain current estimates of costs
and progress schedules. The Contractor shall furnish information regarding
availability of materials, when requested by the Owner, and furnish any
information to the Owner to assist in arriving at the most economical
construction.
3.6.2 The Contractor shall provide administrative, management,
and related services to coordinate scheduled activities and responsibilities of
the Subcontractors with each other and with those of the Contractor, Owner, or
others involved in the Project to use commercially reasonable efforts to manage
each Project in accordance with the approved estimate for costs, the Project
schedule and the Contract Documents.
3.6.3 Utilizing the Project Schedule, the Contractor shall
update all schedules incorporating the activities of the Subcontractors and
others on the Project including activity sequences and durations, allocation of
labor and materials, processing of shop drawings, product data and samples, and
delivery of materials or equipment requiring long lead time and procurement. The
Project Schedule shall include the Owner's requirements and responsibilities
showing portions of the Project having priority. The Contractor shall update and
reissue each Project Schedule as required by Owner to show current conditions
and percentages of completion. The Contractor shall keep a daily log containing
a record of weather, each Subcontractor on the site, number of workers,
identification of equipment, Work accomplished, problems encountered, and other
similar relevant data as the Owner may require. If an update indicates that the
previously approved Project Schedule may not be met, the
CONFIDENTIAL
Page 17
Contractor shall immediately notify Owner and recommend corrective action. The
Contractor shall schedule and conduct meetings to discuss such matters as
progress and scheduling with Owner as set forth in the Work Order or as
requested by Owner.
3.6.4 Consistent with the various bidding documents, Contract
Documents and utilizing information from the Subcontractors, the Contractor
shall coordinate the sequence of construction and assignment of space in areas
where the Subcontractors are performing work.
3.6.4.1 The Contractor shall at all times enforce
strict discipline and good order among its employees and shall not employ on any
Project any person not skilled in the task assigned to him or her. The
Contractor shall be responsible to maintain and observe and to require its
Subcontractors to maintain and observe, sound labor and safety practices and
shall require each Subcontractor to take all steps reasonably necessary to avoid
labor disputes or work stoppages. For Engineering Services Central Office
Equipment projects, Contractor agrees to use personnel and Subcontractors who
have been certified in certain high skill procedures under Owner's mandatory
training program. The expense of obtaining such certification is to be paid by
the Subcontractor for Subcontractor's forces and as a Reimbursable Cost for
Contractor's personnel. Owner shall make such training available at a nominal
cost.
3.6.4.2 The Contractor shall coordinate and supervise
the work performed by Subcontractors to the end that the work is carried out
without conflict between trades or jurisdictional disputes and so that no
Subcontractor, at any time, causes delay to the general progress of a Project.
The Contractor and all Subcontractors shall at all times afford each other
Subcontractor, any separate (Sub)contractor, and the Owner, every reasonable
opportunity for the installation of work and the
CONFIDENTIAL
Page 18
storage of materials, and shall provide access to and the use of necessary
loading dock and hoist facilities, adequate storage room and necessary utilities
and other services. Wherever the work of a Subcontractor is dependent upon the
work of other Subcontractors, the Contractor shall require the Subcontractor to:
(a) coordinate his work with the dependent work;
(b) provide necessary dependent data and
requirements;
(c) supply and/or install items to be built into
dependent work of others;
(d) make provisions for dependent work of
others;
(e) examine dependent drawings and
specifications;
(f) examine previously placed dependent work;
(g) check and verify dependent dimensions of
previously placed work;
(h) notify Contractor of previously placed
dependent work or dependent dimensions which
are unsatisfactory or will prevent a
satisfactory installation of this Work; and
(i) not proceed with this Work until the
unsatisfactory dependent condition has been
corrected.
3.6.4.3 The Contractor shall develop and implement
procedures for the review and processing of applications by Subcontractor for
progress and final payments.
3.6.4.4 Based on the Contractor's observations and
evaluations of each Subcontractor's application for payment, the Contractor
shall review, certify and pay the amounts due the respective Subcontractor.
CONFIDENTIAL
Page 19
3.6.5 The Contractor shall manage the performance of each of
the Subcontractors with all due diligence to ensure that the requirements of the
Contract Documents are met. The Contractor shall take appropriate action against
Subcontractor(s) when requirements of a Contract Document are not being
fulfilled and shall take commercially reasonable steps to assure compliance with
the Contract Documents.
3.7 CHANGES. The Owner may, at any time, by written change order
("Change Order"), make changes in the drawings, specifications, schedule or
other aspects of a Project. The Contractor may also, through the course of
performance of Work, recommend changes to the design, schedule or budget for any
Project for approval by Owner. Contractor will utilize commercially reasonable
efforts to minimize the effect on costs and schedules in accommodating such
change. The purpose of a Change Order is to provide control in changes in Work,
Project configuration, budget and/or schedules on a formal basis. No changes
shall be made to any Project without an appropriate Change Order. All Change
Orders shall be in the form attached hereto as Exhibit E and executed by both
parties. The time and schedule for completion of the Project affected shall be
extended as reasonably required to complete the Work so changed. If the changes
desired change the Work contemplated including, but not limited to: (a) changes
in, substitutions for, additions to or deletions of any Work; (b) changes in the
specifications or drawings, (c) changes in the schedule or acceleration,
deceleration or suspension of performance of any Work; and (d) substantial
changes in the location, alignment, dimensions or design of items in the Work
and/or if the Owner requests the Contractor to perform added Work outside the
scope of such Project, then, prior to the performance of such additional Work an
equitable
CONFIDENTIAL
Page 20
adjustment in the Project Schedule, Project Budget and Project Staffing Plan
will be negotiated by the parties for such Work and included in the applicable
Change Order.
3.7.1 In the event the estimated costs of a Work Order or
agreement for Other Work exceed or are likely to exceed the total budget for the
Project or One Hundred Ten percent (110%) of the budget for any individual
budget line item, the Contractor will promptly notify Owner of such condition so
the appropriate action can be taken by Owner in response to the variance.
3.8 COMMENCEMENT AND COMPLETION OF WORK. The Contractor shall commence
Work on the commencement date reasonably set by Owner in the Work Order and
shall complete the Work and turn the Project over to the Owner (after final
inspection and testing) ready for acceptance by Owner no later than the date
specified for completion in the applicable Work Order, except as this date may
be changed pursuant to a Change Order or to delays beyond the reasonable control
of Contractor.
3.8.1 FINAL INSPECTION, TESTING AND ACCEPTANCE:
3.8.1.1 FINAL INSPECTION AND TESTING. Upon completion
of construction of any Project hereunder, Contractor shall conduct acceptance
testing, in accordance with the requirements of the Work Order, to demonstrate
that the Work has been performed in accordance with the specification of the
Work Order, including a review of all Contract Documents, drawings,
specifications and other related documents. Owner reserves the right to attend
and observe all final inspections and testing. After completion of acceptance
testing, Contractor shall forward to Owner one copy of all test results for
approval.
3.8.1.2 Upon completion of all Project requirements,
Contractor shall provide Owner with a Certificate of Completion that signifies
the Project is completed and shall assist the
CONFIDENTIAL
Page 21
Owner with the final inspection of the Project. Once the Owner has completed the
final inspection and accepted the test results and as-builts, Owner shall
signify its final acceptance of the Project by approving a Certificate of
Completion in the form attached hereto as Exhibit F.
3.8.1.3 The Certificate of Completion shall identify
all currently known and outstanding liabilities, charges, claims made by
Subcontractors and potential financial obligations that have not been resolved
at the time of final completion.
3.8.1.4 Notwithstanding anything to the contrary in
this Agreement, acceptance of any Work performed by Contractor for Owner
hereunder shall not affect the warranties set forth in Section 10 hereof.
3.9 AS-BUILT DRAWINGS. Drawings showing all facilities and elements as
built by Contractor for Owner for a Project ("As-Builts") shall meet Owner
specifications as set forth in the Work Order and shall be prepared in a
computerized format acceptable to Owner. Contractor shall turn over within 30
calendar days after completion of testing, two (2) hard copies and one (1) soft
electronic copy of the entire set of As-Builts for each Project. For a period of
three (3) years after Notice of Acceptance, Contractor will also maintain a full
set of As-Builts in both hard copy and soft electronic copy in its files for
each Project. Final acceptance of any Project shall be subject to Owner's
acceptance of As-Builts from Contractor.
3.10 SPECIFICATIONS AND STANDARDS. All Work for any Work Order or
agreement for Other Work performed hereunder shall be performed in addition to
all requirements and specifications set forth in the Work Order or agreement for
Other Work, in accordance with the requirements and specifications of the
National Electric Code, the National Electric Safety Code (both as they
currently
CONFIDENTIAL
Page 22
exist or are amended) and any other requirements imposed by any governmental
authority or agency having jurisdiction.
3.11 LIEN WAIVERS. Unless otherwise prohibited by Law, Contractor will
waive all rights to place any lien and will require all Subcontractors to waive
all rights to place any lien against the equipment, materials, or other property
used in a Project and shall provide a written statement in the Contract
Documents evidencing such waivers to Owner prior to the commencement of any Work
hereunder. Any failure by Contractor to secure such waivers which are not
otherwise prohibited by law, without the written consent of Owner shall be
promptly corrected at Contractor's expense. Contractor may, at its option,
correct by bonding over its failure to receive such waivers.
3.12 TIMING/DELAYS.
3.12.1 Time shall be of the essence for Owner and Contractor
in the performance of Agreement.
3.12.2 It is specifically agreed that neither Contractor nor
Owner shall be held responsible or liable for any loss, damage, detention or
delay ("Loss"), arising from causes beyond the control and without the fault or
negligence of the Contractor or Owner, including but not limited to acts of God,
acts of the public enemy, acts of another contractor in the performance of a
contract with the Owner which is not performed pursuant to a Work Order
hereunder, fires, floods, epidemics, quarantine restrictions, strikes, freight
embargoes, or unusually severe weather or delays of Subcontractors or suppliers.
Contractor shall not be held responsible or liable for any Loss resulting from
suspension of Work by or acts or neglect of Owner. In the event of such Loss,
Contractor or Owner shall promptly give written notice to the other party and
the time and/or cost for performance
CONFIDENTIAL
Page 23
of each affected Project, shall be adjusted by Change Order pursuant to Article
3, subsection 3.7 hereof.
3.13 CORRECTIVE ACTION PLAN. If Contractor consistently fails to comply
with any non-material provision of the Agreement, any Work Order or any
agreement for Other Work Owner may, at its sole discretion and with sufficient
written description of the failure, direct that Contractor produce a corrective
action plan to remedy such failure within ten (10) days of receipt of such
request. In the event that such corrective action plan performed by Contractor
does not remedy such failure, Owner may escalate the issue in accordance with
the provisions of Article 8, Subsection 8.2 of this Agreement.
ARTICLE 4. PAYMENT AND COSTS
4.1 PAYMENT. The parties intend for this Agreement to be a "Cost Plus"
Agreement and that, except as otherwise provided herein, Contractor shall not be
obligated to incur any costs which will not be reimbursed by Owner as set forth
herein nor shall Contractor charge Owner any costs not directly related to a
Work Order. For each Work Order, the Owner shall pay the Contractor the Project
Sum, which shall be comprised of the reimbursable costs ("Reimbursable Costs")
as defined below, and a fee ("Contractor's Fee"), which shall be 12% of the
total of the Reimbursable Costs for such Project,
4.1.1 REIMBURSABLE COSTS. The Reimbursable Costs shall be all
actual direct costs necessarily incurred and paid by the Contractor for Owner in
the proper performance of the Work for a Work Order. Such Reimbursable Costs
allowable under this Agreement shall be the costs and expenses which are
actually incurred by the Contractor in the performance of a Project pursuant to
a
CONFIDENTIAL
Page 24
Work Order hereunder. Reimbursable Costs shall include but shall not be limited
to all actual direct costs incurred by the Project office, Project staff, and
other items directly related to a specific Project performed hereunder,
including prorated costs for general liability, worker's compensation and other
insurance coverage required for Owner's Work which insurance is carried at a
corporate level by Contractor. Failure to mention any item of Reimbursable Costs
herein shall not bear upon a determination of its allowability. All Reimbursable
Costs must be documented and copies of invoices including a detailed summary of
charges shall be sent to Owner prior to the making of any payment by Owner
therefor.
4.1.1.1 LABOR AND LABOR-RELATED ITEMS.
(a) LABOR COST. Labor cost shall be the
actual direct cost of Project staff, including salary or wages,
benefits, payroll insurance and payroll taxes. The positions included
as Reimbursable Cost are limited to those positions listed in the
Project Staffing Plan. Other positions such as any corporate office
support staff and other corporate level supervisory personnel are
considered to be overhead to the Project and are, therefore, explicitly
not Reimbursable Cost. Vacation, personal day pay, holiday pay, sick
leave pay, bonus and rest and relaxation (R&R) pay shall be charged as
incurred. Owner shall have the right on an annual basis and at Owner's
expense to an independent audit of Project timesheets and payroll
records to determine whether a materially disproportionate amount of
vacation pay, personal day pay, holiday pay, sick leave pay, bonus and
R&R pay is being charged to Owner's Projects. In the event such an
audit discloses such a disproportionate charge, Owner shall be entitled
to an equitable adjustment to charges for labor costs and associated
Contractor's Fees. If the
CONFIDENTIAL
Page 25
disproportionate charge is three percent (3%) or more than what should
be charged to Owner's projects hereunder then Contractor shall
reimburse Owner for the actual direct cost of such audit. Contractor
agrees that during its normally scheduled annual review process it
shall determine the average annual salary paid in the previous year for
its field employees. Contractor further agrees that the change in
salary or wages over a Contract year shall not increase on a percentage
basis more than the percentage increase in the Consumer's Price Index
for all urban consumers (CPIU). In the event the Contractor desires to
change salary or wages of its Project Staff in excess of the CPIU
percentage increase for any Contract Year, then Contractor shall
provide notice and justification for such increase to Owner. Owner
shall promptly review such information and shall not unreasonably
withhold consent to such request. Bonus amounts paid to Contractor
employees assigned to Owner's Projects will be consistent with Bonus
amounts paid to all of Contractor's employees in comparable positions.
(b) Cost of Living Adjustment ("COLA")
applied to labor costs where applicable will be consistent with
Contractor's policy set forth in Exhibit G.
(c) The cost of moving supervisory and
administrative employees who are assigned to the Work for a specific
Project from their last place of employment in accordance with the
Contractor's current moving policy which is attached hereto and
incorporated herein as part of Exhibit G shall be a Reimbursable Cost.
Owner shall not pay relocation costs for the movement of any Contractor
employee from Owner's Project Site. However, Owner shall pay the costs
of demobilization for a Project if the project is canceled or
substantially reduced in scope prior to completion.
CONFIDENTIAL
Page 26
(d) Travel Expenses in connection with the
following:
(i) Trips included in Contractor's
current R&R policy attached hereto and incorporated herein as part of
Exhibit G;
(ii) Trips to various fabricating
plants, Subcontractor or material supplier locations to inspect their
facilities and/or financial condition in regard to the Work on a
Project which Work is approved by Owner via a Work Order and trips to
various fabricating plants, Subcontractor or material supplier
locations to inspect the progress of the Work being prepared for a
Project and to consult on methods of fabrication, shipment, etc.;
(iii) Trips for Project Management
Staff for training purposes including training courses, Project
Management Meetings to be held not more often than once per calendar
quarter not to exceed One Hundred Fifty Thousand Dollars ($150,000.00)
per Contract Year provided such training is directly related to the
improvement of the Project Management Staff's skills in the performance
of Work for Owner's Projects; and/or
(iv) Trips conducted as part of the
relocation provisions of Article 4.1.1.1(b) above.
(e) In order to reduce the number of personnel
assigned to the job site or to expedite the performance of the Work
hereunder, Contractor may, as agreed to and stated in the applicable
Work Order, perform off-job site engineering, drafting clerical and/or
accounting work, in which case the costs of such Work shall be charged
to the Project based
CONFIDENTIAL
Page 27
on actual labor costs marked up by the percentages in Exhibit D,
supported by time cards, expense reports, and expense vouchers. These
charges shall be considered Reimbursable Costs as defined in Article 4.
4.1.1.2 MATERIALS AND MATERIAL-RELATED ITEMS
(f) The cost of all permanent materials,
equipment and supplies directly related to a Work Order. Credit shall
be given the Owner for all trade or quantity discounts obtained from
vendors by Contractor for the purchase of materials, equipment or
supplies.
(g) The actual cost of all temporary and other
expendable services, materials and supplies, including, fuel, oil and
grease, which are normally consumed in performance of the Work. Any
such expendable materials and supplies for which the Contractor has
been reimbursed by the Owner and which remain after completion of the
Work will be disposed of as directed by the Owner.
(h) The cost of all necessary inspections,
tests, loading, handling, permits, transportation and insurance of
whatever character or description paid by the Contractor for materials
and supplies used in the construction of a Project.
(i) All materials, equipment and supplies shall
be delivered, handled, stored, installed protected and disposed of in
such a manner to prevent damage in accordance with current practice in
the industry, in accordance with manufacturer's specifications and
recommendations, in accordance with the Work Order requirements and in
accordance with all laws. The Contractor will haul and store packaged
materials and equipment in their original and sealed containers, marked
with the brand and manufacturer's name, until ready for use, and
CONFIDENTIAL
Page 28
haul and deliver such materials and equipment in ample time to
facilitate inspections and tests prior to installation. The "delivery"
in reference to any item specified or indicated means the unloading and
storing with proper protection at the Project site. Damaged materials
or equipment will be rejected and removed from the site by the
Contractor.
4.1.1.3 EQUIPMENT AND EQUIPMENT RELATED ITEMS
(j) The cost of rental of all equipment
including but not limited to vehicles required for the Work. The cost
of rental of equipment charged to Owner for equipment owned by the
Contractor for a Project shall be consistent with the current market
rate for renting or leasing similar items from nationally recognized
third party rental companies. The cost of rental of equipment charged
to Owner for use by Contractor from third parties shall be the actual
rental rate charged. The actual rental rate for the equipment shall be
consistent with the current market rates for renting or leasing similar
items from a nationally recognized third party rental company. As part
of any Work Order or agreement for Other Work, the Contractor shall
prepare a utilization chart listing all equipment to be used on the
Project, together with the corresponding fully maintained (excluding
consumable items such as oil, grease and fuel) rental rates for such
equipment, and submit same to the Owner for its approval.
4.1.1.4 MISCELLANEOUS
(k) For any Contractor Project office
supporting more than one Project or in conjunction with a third party's
project, direct actual costs for such Project office shall be prorated
to each Project or project based on a methodology specified in the Work
Order.
CONFIDENTIAL
Page 29
(l) The budgeted fees of any consultants
engaged in a professional capacity pursuant to a Work Order.
(m) Losses and expenses, not compensated by
insurance or otherwise and actual, direct costs associated with the
recovery or collection of such Losses and expenses, including but not
limited to the deductible amount of any insurance required by Article 7
sustained by the Contractor in connection with the Work provided they
have resulted from causes other than the fault or negligence of the
Contractor, its Subcontractors, agents or employees.
(n) All federal, state and local sales
taxes, use taxes, excise taxes, personal property taxes or special
assessments, except taxes on Contractor's income, in connection with
the Work or materials to be performed pursuant to a Work Order or
agreement for Other Work.
(o) Such other items properly chargeable to
the cost of the Project to which Owner and Contractor have previously
agreed to as part of an executed Work Order.
4.2 COST CONTROL. The Contractor recognizes the relationship of trust
and confidence established between it and the Owner by this Agreement and agrees
to furnish its best skill and judgment and to cooperate with the Owner.
Contractor agrees to furnish efficient business administration and
superintendence, and to use commercially reasonable efforts to minimize expense
to the Owner, to keep upon the location for each Project at all times an
adequate supply of qualified workers as specified in the Project Staffing Plan,
tools, equipment and materials and to promote the progress of the work in the
most expeditious and economical manner consistent with the interests of the
Owner.
CONFIDENTIAL
Page 30
4.3 MOST FAVORED NATION. The cost basis for labor and associated cost
items and equipment rental rates charged to Owner under this Agreement or any
Work Order or agreement for Other Work (except for charges by Subcontractors or
other third parties not employees of Contractor) shall be no greater than the
lowest cost basis charged to other customers (including Contractor's
subsidiaries and affiliates) of Contractor.
4.4 INDEPENDENT CONTRACTOR. It is the intention of this Agreement that
the Contractor shall be and remain an independent contractor and nothing herein
is intended to be construed as inconsistent with that status. Contractor and
Owner, expressly intending that no employment, partnership, or joint venture
relationship is created by this Agreement, hereby agree as follows:
(a) Contractor shall act at all times as an
independent contractor hereunder;
(b) Neither Contractor nor anyone employed by
or acting for or on behalf of Contractor shall ever be construed as
an employee of Owner and Owner shall not be liable for employment or
withholding taxes respecting Contractor or any employee of
Contractor;
(c) Except as otherwise provided herein,
Contractor shall determine when, where and how Contractor shall
perform the Work;
(d) Contractor shall take all steps to ensure
that Contractor and Contractor's employees are treated as independent
contractors of Owner;
(e) Owner shall have the right to conduct
inspections and reviews of, and determine satisfactory performance
of, the Contractor's services;
CONFIDENTIAL
Page 31
(f) Contractor shall provide Contractor's own
materials, tools and equipment in performing the services;
(g) Contractor shall, as an allocated cost ,
maintain workers compensation insurance for Contractor and for all
others employed by or acting for or on behalf of Contractor only to
the extent and in the amounts required by law;
(h) Contractor shall be free to contract with,
and provide Contractor's services to, parties other than Owner during
the term of this Agreement, subject to the confidentiality
restrictions delineated herein;
(i) Contractor shall not make any commitment or
incur any charge or expense in the name of Owner without the prior
written approval of Owner; and
(j) Contractor, for Contractor and for anyone
claiming through Contractor, waives any and all rights to any
consideration, compensation or benefits, except as provided for
herein.
4.5 ACCOUNTING SYSTEM. The Contractor shall keep accurate and detailed
books of account for all Work performed for each Project open to the inspection
of the Owner at reasonable times and frequency during Contractors regular
business hours to verify all Reimbursable Costs, and Contractor's Fees due to
Contractor hereunder. Contractor shall make its books and records available at
Owner's election, to an independent certified public accountant reasonably
acceptable to Contractor for the purpose of auditing the Reimbursable Cost
including the labor burden factors as shown on Exhibit D, and Contractor's Fees.
Contractor shall keep such full and detailed accounts and Project costs as may
be necessary for proper financial management by the Contractor under this
Agreement in a manner and
CONFIDENTIAL
Page 32
pursuant to methods which are reasonably satisfactory to the Owner. Owner shall
have the right to request other reports as are deemed necessary by Owner and
Contractor shall comply with such request. Owner shall be responsible for and
shall reimburse Contractor for any direct costs associated with such requested
reports. The Contractor shall also monitor the approved cost estimate for each
Project and shall show actual costs for activities in progress and estimates for
uncompleted tasks by way of comparison with such approved estimate. In the event
the results of any audit show Contractor's costs to be in error to the material
detriment of Owner, Contractor shall credit to Owner any such differentials and
Contractor shall also reimburse Owner for the costs of the audit.
Contractor shall at all times act in good faith and to the
best advantage of the Owner in the purchase of materials, in the employment of
labor, and in all its conduct and activities relative to any work on Projects
performed pursuant to this Agreement.
4.6 PROGRESS PAYMENT. As soon as is possible after the first of each
month, the Contractor shall submit to the designated office of the Owner an
application for payment for the Work performed for each Project in the preceding
month less any retainage held for Contractor's Subcontractors. Contractor may,
subject to approval of Owner, submit an aggregate progress payment application
for Projects or a separate application for each Project, but in any event, costs
for each Project shall be separately stated.
4.6.1 Monthly payments to the Contractor for the Work
performed to such date will be made within thirty (30) days after receipt of
each invoice by the Owner. Such applications for payment shall be submitted, in
a form satisfactory to the Owner which form is attached hereto as Exhibit J and
shall be accompanied by documentation of all Reimbursable Costs including but
not
CONFIDENTIAL
Page 33
limited to weekly payrolls and time sheets, showing the amounts paid to each
worker or employee, and allocation of each employee's time to the Project and
bills for materials delivered to each Project site and payments made or due to
Subcontractors. Contractor and Owner shall use commercially reasonable efforts
to resolve any disputed items within five (5) business days after the payment
due date. Any disputes not resolved within this time frame shall be handled in
accordance with Article 8, Subsection 8.2 hereof. Owner may withhold payment for
any disputed items until all such issues relating thereto are resolved, but
shall pay all undisputed amounts promptly in accordance with the provisions of
this Agreement. Owner shall act in good faith and not in an arbitrary or
capricious manner in disputing any amount. The basis for disputed amounts shall
be documented to Contractor. As used in this Article 4, Subsection 4.6.1,
"amount" shall be defined as a specific line item or items in a relevant
invoice, not the total amount of the invoice, unless all line items in the
invoice are reasonably disputed. Monthly payments to the Contractor shall, in
addition to payment for Reimbursable Costs for Work Performed, include the
Contractor's Fee to be paid to the Contractor for such Work performed in the
applicable month.
4.6.2 The Contractor's application for payment shall
constitute a representation to the Owner, based on its determinations at the
Project site, that to the best of the Contractor's knowledge, information and
belief, the Work has progressed to the point indicated and the quality of the
Work is in accordance with the Work Order. The foregoing representations are
subject to an evaluation of the Work for conformance with the Work Order upon
substantial completion, the results of subsequent tests and inspections, to
minor deviations from the Work Order correctable prior to acceptance.
CONFIDENTIAL
Page 34
4.7 LATE PAYMENT. Any payment not made by Owner to Contractor within
forty-five (45) days after the date of invoice shall bear interest on a monthly
basis from the date due until the date paid at the rate of the sum of the prime
rate then current as published in the Wall Street Journal plus four percent (4%)
divided by twelve (12). Any payment not made by Owner to Contractor with ninety
(90) days after the date of the invoice shall bear interest on a monthly basis
beginning on the 90th day at rate of the sum of the prime rate then current as
published in the Wall Street Journal plus eight percent (8%) divided by twelve
(12) but in no event shall this amount be greater than the maximum interest
amount allowed by applicable laws. Payment shall be deemed made on the date
received by Contractor. Owner shall also pay Contractor's actual costs incurred
for collection of any late payment or fees due hereunder, including reasonable
attorneys fees. Interest or collection costs paid hereunder shall not be applied
to the Aggregate Project Sum. Any failure by Owner to make payments when due
within ninety (90) days of the date of invoice three (3) or more times during
each Contract Year may be an event of default pursuant Article 8 hereof.
4.8 ANNUAL AND AGGREGATE PROJECT SUM. Owner hereby agrees to execute
sufficient Work Orders and agreements for Other Work with Contractor under this
Agreement so that the Annual Project Sum shall total no less than Forty Million
Dollars ($40,000,000.00) per Contract Year and the Aggregate Project Sum shall
total no less than Three Hundred Twenty Five Million Dollars ($325,000,000.00)
during the Term. The Annual Project Sum shall be defined as the sum of all
payments due by Owner to Contractor for Work actually performed by Contractor
during a Contract Year including Reimbursable Costs and Contractor's Fees for
each Project (hereinafter "Annual Project Sum"). The Aggregate Project Sum shall
be defined as the sum of all payments paid or due
CONFIDENTIAL
Page 35
by Owner to Contractor for Work actually performed by Contractor hereunder
including Reimbursable Costs and Contractor's Fee for each Project (hereinafter
"Aggregate Project Sum") for all Work Orders and agreements for Other Work
executed during the Term. Both the Annual Project Sum and the Aggregate Project
Sum shall include any Contractor's Fee Trueup amounts as set forth in Subsection
4.10.
4.9 COMMITMENT FULFILLED. Owner and Contractor agree that Owner shall
have met the Annual Project Sum commitment when the total Annual Project Sum is
Forty Million Dollars ($40,000,000). Owner and Contractor agree that Owner shall
have met the Aggregate Project Sum Commitment when the total Aggregate Project
Sum is Three Hundred Twenty Five Million Dollars ($325,000,000.00) at the end of
the Term. Further, the parties agree that Owner shall have met all commitments
hereunder when the total Aggregate Project Sum reaches Five Hundred Million
Dollars ($500,000,000.00) which may occur at any time during the Term. Owner
shall have the right to unilaterally terminate this Agreement upon its payment
of the Aggregate Project Sum to Contractor. Upon such termination Owner shall
have no further obligations to Contractor hereunder except as otherwise provided
herein. The parties agree that the Aggregate Project Sum and the Annual Project
Sum for the first Contract Year shall include but are not limited to the amounts
for Work performed by Contractor subsequent to the date of this Agreement for
Projects listed on Exhibit A, attached hereto and incorporated herein.
4.10 CONTRACTOR'S FEE TRUEUP. In the event Owner fails to execute Work
Orders or commitments for Other Work sufficient to reach the Annual Project Sum
or the Aggregate Project Sum, upon expiration of the Contract Year or Term, as
appropriate, Owner shall pay Contractor, in
CONFIDENTIAL
Page 36
addition to all other sums due by Owner to Contractor hereunder the
"Contractor's Fee Trueup"," which shall be computed as follows:
4.10.1 Revenue Shortfall =
(a) Annual Project Sum commitment minus all
amounts paid, invoiced or otherwise due by Owner to Contractor for
completed portions of Work Orders and/or agreements for Other Work
during a Contract Year; and /or
(b) Aggregate Project Sum commitment minus all
amounts paid, invoiced or otherwise due by Owner to Contractor during
the Term minus any amounts for Work in progress at the end of the
Term which Work is performed and payment is made or due within twelve
(12) months after the end of the Term.
4.10.2 Revenue Shortfall = X
Contractor's Fee Trueup = .12X
4.10.3 The Contractor's Fee Trueup due for each Contract Year,
if any, shall be due within forty-five (45) days after the date of invoice and
late payments shall be treated in accordance with subsection 4.7 hereof. An
estimated final Contractor's Fee Trueup, if any, shall be due at the end of the
Term within forty-five (45) days after the date of invoice and late payments
shall be treated in accordance with subsection 4.7 hereof. The final
Contractor's Fee Trueup, if any, shall be invoiced twelve (12) months after the
completion of the Term and shall also be treated in accordance with subsection
4.7 hereof.
4.11 ABLE TELCOM'S PROMISSORY NOTE. Notwithstanding any provision of
this Agreement to the contrary, (1) if a default shall have occurred under the
Promissory Note, dated July 2, 1998 (the
CONFIDENTIAL
Page 37
"Promissory Note"), of Able Telcom Holding Corp. ("Able") in favor of MFS
Communications Company, Inc., Owner shall apply twelve (12) percent of sums due
from Owner to Contractor at the times such sums would otherwise have been
required to be paid to Contractor as provided in subsection 4.10.3 hereof toward
partial prepayment of the principal first and then to all other amounts owing
under the Promissory Note until such time as the Promissory Note is paid in
full, (2) if the Promissory Note is not paid in full by August 31, 1998, Owner
shall not be obligated to execute Work Orders and agreements for Other Work with
Contractor during the period the Promissory Note remains not paid in full, and
(3) if the Promissory Note is not paid in full by August 31, 1998, during the
period the Promissory Note remains not paid in full, the Annual Project Sum
shall be reduced by the amount determined by multiplying the actual number of
days after August 31, 1998 in which any balance under the Promissory Note
remains unpaid in full times $40,000,000/365 and the Aggregate Project Sum shall
be reduced by the amount determined by multiplying the actual number of days
after August 31, 1998 in which any balance under the Promissory Note remains
unpaid in full times $325,000,000/1825.
ARTICLE 5. OWNER'S RESPONSIBILITIES
5.1 AUTHORIZED REPRESENTATIVE. The Owner shall designate a
representative authorized to act on the Owner's behalf with respect to each
Project. The Owner, or such authorized representative, shall render decisions in
a timely manner pertaining to documents submitted by the Contractor in order to
avoid unreasonable delay in the orderly and sequential progress of the Work.
5.2 PROVISION OF DATA. Owner shall provide any and all relevant plans,
specifications, facts and other data to the Contractor as agreed to in the Work
Order promptly upon request of Contractor to enable the Contractor to complete
the work by the completion date specified in the Work Order.
CONFIDENTIAL
Page 38
5.3 OWNER'S OWN FORCES. The Owner reserves the right to perform
construction and operations related to a Project with Owner's own forces, and to
award Contracts in connection with the Project which are not part of the
Contractor's responsibilities pursuant to a Work Order. Owner will notify
Contractor in writing of such election. The Contractor shall notify the Owner if
any such independent action will interfere with the Contractor's
responsibilities under this Agreement and Owner agrees to cooperate with
Contractor and all Subcontractors.
5.4 PROMPT REPLY. Information or services under the Owner's control
shall be furnished by the Owner with reasonable promptness to avoid delay in the
orderly progress of the Contractor's services and the progress of the Work.
5.5 FAILURE TO PROVIDE INFORMATION. If Owner fails to provide in a
timely manner any information or services necessary to the progress of a Project
or makes an election under Article 5.3, Contractor shall be entitled to an
equitable adjustment, by way of a Change Order, in the budget and schedule for
such project.
ARTICLE 6. OWNER'S AND CONTRACTOR'S REPRESENTATIONS
6.1 CONTRACTOR REPRESENTATIONS AND COVENANTS. Contractor represents to
and covenants with Owner as follows:
(a) Contractor is duly organized and validly existing and
Contractor has the authority to execute this Agreement and has access
to sufficient personnel and expertise to perform its obligations
hereunder; and
(b) Contractor will use its commercially reasonable efforts,
in good faith, to keep all required authorities in full force and
effect during the Term and to obtain any additional
CONFIDENTIAL
Page 39
authorities, permissions or certifications which may be required in
connection with this Agreement.
(c) There are no pending, or to Contractor's knowledge
threatened, claims, actions, suits, audits, investigations or
proceedings by or against Contractor which would have a material
adverse effect on Contractor's performance under or ability to comply
with this agreement.
6.2 OWNER REPRESENTATIONS AND COVENANTS. Owner represents to and
covenants with Owner as follows:
(a) Owner is duly organized and validly existing and Owner
has the authority to execute this Agreement and perform its obligations
hereunder;
(b) Owner will use its commercially reasonable efforts, in
good faith, to keep all required authorities in full force and effect
during the Term and to obtain any additional authorities, permissions
or certifications which may be required in connection with this
Agreement; and
(c) There are no pending, or to Owner's knowledge,
threatened, claims, actions, suits, audits, investigations or
proceedings by or against Owner which would have a material adverse
effect on Owner's performance under or ability to comply with this
Agreement.
ARTICLE 7. INSURANCE AND BONDS
Prior to commencement of any Work for any Project hereunder, Contractor
shall procure and maintain, with insurers reasonably acceptable to the Owner,
the following insurance protecting the Owner, Contractor and all other parties
required by the Owner against liability from damages because
CONFIDENTIAL
Page 40
of injuries, including death, to persons, and liability for damages to property
arising from Contractor's operations, including its employees, agents,
Subcontractors and suppliers operations, in connection with the performance of
this Agreement. This insurance shall be kept in good standing during the term of
this Agreement. Owner reserves the right to have an Owner controlled Insurance
Program for all Work performed by Contractor and Contractor agrees to cooperate
reasonably with such efforts. Additional insurance requirements, if any,
required by third parties shall be set forth in the applicable Work Order or
Agreement for Other Work. The cost of insurance (including co-insurance and
deductibles paid) shall be a Reimbursable Cost hereunder and coverage for the
Projects shall be provided as follows:
7.1 WORKER'S COMPENSATION AND EMPLOYER'S LIABILITY. Worker's
Compensation insurance complying with the laws of the state or states of
operation, whether or not such coverage is required by law, and Employer's
Liability insurance with limits of $1,000,000 each accident, including
occupational disease coverage with a limit of $1,000,000 each employee and
$1,000,000 disease policy limit. If work is to be performed in Nevada, North
Dakota, Ohio, Wyoming, Washington or West Virginia, Contractor will purchase
Worker's Compensation in the State Fund established in the respective States.
Stop Gap Coverage or Employers Overhead coverage will be purchase.
When any Work Order calls for water operations, Longshoreman's and
Harbor Worker's Compensation insurance, ▇▇▇▇▇ Act, and Maritime Coverage
providing for transportation, wages, maintenance and cure, with the limits of
$500,000 each employee, $500,000 more than one employee, shall be included. An
endorsement shall be attached evidencing that a claim "in rem" shall be treated
as a claim against the employer.
CONFIDENTIAL
Page 41
7.1.1 Commercial General Liability insurance with a combined
single limit for bodily injury and property damage of $2,000,000 each occurrence
and $4,000,000 annual aggregate. Annual aggregate shall apply on a per project
basis. Such policy shall include coverage for all operations of Contractor,
including products and completed operations coverage, blanket contractual
liability and independent contractor coverage, and will be endorsed to delete
exclusion for work, construction or demolition within 50 feet of railroad
trackage. This policy shall include no modifications that reduce the standard
coverages provided under a Commercial Guaranty Liability policy form.
7.1.2 Business Automobile Liability insurance with a combined
single bodily injury and property damage single limit of $2,000,000 each
occurrence. This policy shall include coverage for owned, non-owned, and hired
vehicles.
7.1.3 When vessel(s) or barge(s) are used by the Contractor for
the performance of Work, protection and indemnity, collision and towers
liability insurance if applicable, on such vessel(s) or barge(s) both owned and
non-owned, in a single limit of not less than $5,000,000 or the value of the
vessel(s) or barge(s), which ever is greater, shall be provided.
When vessel or barges are used, the Contractor will provide hull
insurance in amounts to the full value of the vessel(s) or barge(s) owned and/or
operated by or for the Contractor.
7.1.4 In the event Contractor conducts diving operations, with
the divers who are employees, agents or servants of Contractor, from Owner's
vessels, Contractor's vessels or any other marine equipment, they shall only do
so at the express written request of the Owner Representative. Contractor agrees
to indemnify and save Owner harmless from any liability, loss, cost or damage,
including cost of defense, arising from or connected with such diving
operations.
CONFIDENTIAL
Page 42
Seaworthiness of Owner's vessel(s) used herein for such diving
operations is acknowledged and agreed to by Contractor, and neither Contractor
nor its insurance carrier shall contest this.
7.1.5 When aircraft is used by the Contractor for performance of
the Work, the contractor will provide Aircraft Liability insurance on both owned
and non-owned aircraft, including helicopters, with combined single limit of
$1,000,000 per seat for bodily injury and property damage, including passenger
legal liability.
When any aircraft is used by the Contractor for the performance
of the Work, Aircraft Hull insurance in amounts to the full value of each
aircraft will be maintained by the Contractor on such aircraft owned and/or
operated by or for the Contractor.
7.1.6 Umbrella or Excess Liability Insurance applying in excess
of 7.1.1 through 7.1.5 above subject to a limit of $5,000,000.
7.1.7 The maintenance of insurance by the Contractor and the
limits of coverage required shall in no way limit or affect the extent of the
Contractor's liability.
7.1.8 Limits required above may be obtained through various
primary and umbrella structures.
7.2 BUILDER'S RISK. As requested by Owner, Contractor shall procure and
maintain during the term of a Work Order or an agreement for Other Work, an all
risk builders' risk insurance policy protecting the Owner, Contractor and all
Subcontractors, as their interests may appear, from loss due to damage to the
Work or to any equipment supplies or material including any such items directly
provided by Owner pursuant to Article 4 hereof going into the Work, while at the
Project site, or while
CONFIDENTIAL
Page 43
in transit to or from the Project site. The limit of liability of this insurance
shall be no less than the greater of the value of the Project after the Work has
been performed or the approved Project Budget estimate in the applicable Work
Order per occurrence and shall contain a deductible of no more than $500,000 per
occurrence. If coverage is requested by Owner, cost for builder's risk insurance
shall be a Reimbursable Cost.
7.3 ERRORS AND OMISSIONS. If requested in writing by Owner, Contractor
shall procure and maintain during the term of a Work Order or agreement for
Other Work insurance against the errors or omissions of Contractor or any of
Contractor's employees, agents or subcontractors performing Work hereunder with
limits satisfactory to Owner. If coverage is requested by Owner, cost for Errors
and Omissions insurance shall be a Reimbursable Cost. If coverage is written on
a "claims made" basis, all renewals during the life of this Agreement will
include "prior acts coverage".
7.4 RAILROAD PROTECTIVE. If requested in writing by Owner, Contractor
shall procure and maintain during the term of a Work Order or agreement for
Other Work, Railroad Protective Insurance protecting Owner, Contractor and
Subcontractor and in such limits as specified in the applicable Work Order.
7.5 INSURANCE REQUIRED OF SUBCONTRACTORS. Except as may be waived or
modified by Owner in writing, the Contractor shall require all Subcontractors to
provide and maintain the insurance required above subject to all requirements
set forth in this Article 7, provided however, that Builder's Risk, Errors and
Omissions, Railroad Protective, Owners Contractors Protective Liability and
Contractors Pollution Liability insurance shall only be required of
Subcontractors if requested by Owner as part of the Work Order agreement for
Other Work or if required pursuant to Article 3,
CONFIDENTIAL
Page 44
Subsection 3.5 hereof. Contractor and Owner shall be listed as additional
insureds on Subcontractor's policies. Owner's approval of any Subcontractor
shall be conditioned upon a Subcontractor having the required insurance
coverage. Except as may be waived or modified by Owner in writing, each
Subcontractor shall also require its Subcontractors, if any, to provide and
maintain insurance as required above.
7.6 ADDITIONAL INSURED. Owner shall be listed as an additional insured
on Contractor's and Subcontractor's policies. Contractor hereby waives its
right, and agrees to require its underwriter any and all Subcontractors to waive
all such rights, of subrogation against Owner, its officers, directors, agents,
and employees thereof, and corporate shareholders and officers, directors,
agents and employees thereof. Such waiver shall also extend to companies and
other legal entities that control, are controlled by, are subsidiaries of or are
affiliated with Company, and the respective officers, directors, agents,
employees and shareholders of such companies or entities. Contractor's insurance
is understood to be primary as respects the interest of additional insureds.
7.6.1 Owner or its Affiliates shall not insure nor be responsible
for any loss or damage to property of any kind owned or leased by Contractor or
its employees, servants, and agents. Any policy of insurance covering the
Property owned or leased by Contractor against loss by physical damage shall
provide that the underwriters have given their permission to waive their rights
of subrogation against Owner, its Affiliates and their Directors, officers, and
employees, as well as their subsidiaries and affiliates, including directors,
officers, and employees thereof.
7.7 EVIDENCE OF COVERAGE. Certificates of insurance or certified copies
of the insurance policies will be provided to the Owner prior to Contractor
beginning any Work under this Agreement.
CONFIDENTIAL
Page 45
Such certificate shall contain a provision that the insurer will give the Owner
at least thirty (30) days prior written notice of any material changes,
reductions, non-renewal or cancellation of the coverage. Contractor shall obtain
certificates from its Subcontractor(s) and deliver them to Owner, if requested
to do so. In the event of any failure by Contractor to comply with the
provisions of this paragraph, Owner may, at its option on notice to Contractor,
suspend the affected Work Orders or agreement for other work until there is full
compliance with this paragraph or contract for such insurance at Contractor's
expense.
7.8 BONDS. A payment bond from the Contractor shall be required for
each Work Order executed hereunder. The cost shall be a Reimbursable Cost of the
Project, and such bond shall be delivered to the Owner prior to the performance
of any Work. The amount of each bond shall be set by Owner but in no event shall
such amount exceed the amount of the Work Order. The Owner may waive this bond
requirement or, if a bond cannot be obtained for a Work Order, require a letter
of credit or other form of security as an alternative in its sole discretion for
any Work Order performed hereunder. In lieu of individual bonds for each
Project, Contractor and Owner may mutually agree to elect to provide Owner a
blanket payment bond in a face amount to be determined.
7.8.1 Unless and only if Owner waives in writing the
requirement of Article 7.9 for a bond, the Contractor will require payment bonds
of all Subcontractors. Upon Owner's request, copies of all such bonds shall be
provided to Owner for review. The costs of such bonds shall be included in the
Subcontractor's bid price and as such are a Reimbursable Cost. In the event that
Owner waives this requirement for a bond from a Subcontractor, Owner shall be
responsible for any payment default of such unbonded Subcontractor which is not
otherwise cured by legal or equitable remedies.
CONFIDENTIAL
Page 46
ARTICLE 8. DEFAULT AND TERMINATION
8.1 DEFAULT. The following events shall constitute an Event of Default
hereunder.
8.1.1 CONTRACTOR DEFAULT. The Contractor shall be in default
of the Agreement if:
8.1.1.1 Contractor becomes insolvent, is adjudged a
bankrupt, or makes a general assignment for the benefit of its creditors, or
becomes a subject of any proceeding (voluntary or involuntary) commenced under
any statute or law for the relief of debtors, or a receiver, trustee or
liquidator of any of the property or income of Contractor shall be appointed
which judgment, assignment, proceeding or receivership is not dismissed or
discharged within ninety (90) days of the date of notice thereof.
8.1.1.2 Contractor refuses or fails to prosecute the
Work in accordance with the Work Order or agreement for Other Work, or this
Agreement in any material respect; or
8.1.1.3 Contractor fails in any material respect to
observe any other terms, provisions, conditions, covenants, representations,
warranties or agreements in this Agreement, any Work Order or any agreement for
Other Work to be observed and performed on the part of the Contractor ("Material
Default"). A Material Default under subsections 8.1.1.2 and 8.1.1.3 may include
but is not limited to the following:
(a) Failure by Contractor to make proper
payment to Subcontractors or others for undisputed amounts due for
services, materials or labor (provided Owner shall have paid to
Contractor any payments for such Work for which payment is demanded by
Subcontractor) ; or
CONFIDENTIAL
Page 47
(b) Failure by Contractor to comply with
laws, ordinances, rules and regulations or orders of any public
authority having jurisdiction of which Contractor has or should have
knowledge after making reasonably diligent inquiries and except as
directed by Owner and which failure has a material adverse effect on a
Project; or
(c) Failure to use commercially reasonable
efforts to prosecute the work in compliance with the budget or
scheduling requirements, set forth in a Work Order or agreement for
Other Work subject to any equitable adjustments in budget or schedule
as provided herein; or
(d) Failure to correct any incomplete or
unacceptable items during any final inspection and testing which
failure has a materially adverse effect on the Project.
8.1.2 OWNER'S REMEDIES. In the event of a default by
Contractor hereunder, if the failure is not corrected or good faith efforts are
not being made to correct within ten (10) calendar days after receipt of written
notice from Owner to Contractor, Owner may without prejudice to any other right
or remedy:
8.1.2.1 With or without terminating Work Order or
agreement for Other Work, take over and/or subcontract such Work or any portion
thereof and furnish such materials and/or employ such workers as may be
necessary to remedy the noncompliance. Notwithstanding the foregoing, all costs
expended by Owner hereunder, including the value of the Contractor's Fee
applicable thereto, shall be applied to the Annual Project Sum and Aggregate
Project Sum.
8.1.2.2 Terminate the Work Order for the Project in
default, agreement for Other Work in default or this Agreement and all Projects
hereunder and have only the obligation to pay
CONFIDENTIAL
Page 48
Contractor payments due for portions of Work completed pursuant to the
requirements set forth in the applicable Work Order or agreements for Other Work
up to the date of termination. In the event of a termination of this Agreement,
Contractor shall not be entitled to any Contractor's Fee Trueup as set forth in
Article 4.10 hereof; and/or
8.1.2.3 Make a claim against Contractor's or
Subcontractor's bond or other security.
8.1.3 OWNER DEFAULT. The Owner shall be in default of the
Agreement if:
8.1.3.1 Owner fails to make any payment due to
Contractor hereunder three (3) or more times during a Contract Year within
ninety (90) days after the date of invoice, unless such nonpayment is the
subject of a good faith dispute; or
8.1.3.2 Owner becomes insolvent, is adjudged a
bankrupt, or makes a general assignment for the benefit of creditors, or becomes
the subject of any proceeding (voluntary or involuntary) commenced under any
statute or law for the relief of debtors, or a receiver, trustee or liquidator
of any of the property or income of Contractor shall be appointed, which
judgment, assignment, proceeding or receivership is not dismissed or discharged
within ninety (90) days of the date of notice thereof.
8.1.4 CONTRACTOR REMEDIES. In the event of a default by Owner
hereunder if failure is not corrected or good faith efforts are not being made
to correct within ten (10) calendar days after receipt of written notice from
Contractor to Owner, Contractor may without prejudice to any other right or
remedy:
CONFIDENTIAL
Page 49
8.1.4.1 Terminate the applicable Work Order or
agreement for Other Work for default without terminating this Agreement in which
case the Owner shall be responsible for all payments due to Contractor as of the
date of termination of the affected Work Order or agreement for Other Work; or
8.1.4.2 Terminate this Agreement for default.
8.1.5 In the event of a termination of any Work Order,
agreement for Other Work or this Agreement for default, Contractor shall be
entitled to receive reimbursement of all costs including the entire minimum
Contractor's Fee Trueup expected to be paid pursuant to Article 4 hereof during
the Term.
8.1.6 In no event shall Contractor suspend its performance for
any Work under any Work Order or agreement for Other Work prior to termination
of the applicable Work Order agreement for Other Work, or this Agreement as
applicable.
8.2 DISPUTE RESOLUTION / ARBITRATION
8.2.1 MANAGEMENT MEETINGS. Except with respect to payments of
undisputed amounts to Contractor by Owner, in the event of a dispute, claim or
other matter arising out of or relating to this Agreement or breach thereof, the
parties agree that in addition to the remedies available to each party as
outlined above, the parties may contemporaneously provide the other party with a
written notice outlining the nature of the dispute. Within five (5) business
days of the receipt of such notice the Contractor's Project Manager and Owner's
designee shall meet in a good faith effort to resolve the dispute. If the
dispute cannot be resolved at such meeting, the parties agree that within twenty
(20) business days of the initial meeting, a second meeting shall take place
with a Vice President or person
CONFIDENTIAL
Page 50
with similar decision making authority representing each of the Contractor and
Owner. If the dispute remains unresolved after such second meeting and the
parties have used good faith efforts to otherwise resolve the dispute then the
parties shall participate in Arbitration as set forth below.
8.2.2 ARBITRATION. All claims, disputes and other matters in
question arising out of, or relating to, this Agreement or the breach thereof
which are not resolved pursuant to 8.2.1 above, shall be decided by arbitration
in accordance with the Construction Industry Arbitration Rules of the American
Arbitration Association then in effect unless the parties mutually agree in
writing otherwise. This Agreement to arbitrate shall be specifically enforceable
under the prevailing arbitration law. The award rendered by the arbiters shall
be final, and judgment may be entered upon it in accordance with applicable law
in any court having jurisdiction thereof.
8.2.2.1 Notice of demand for Arbitration shall be
filed in writing with the other party to the Agreement and with the American
Arbitration Association. The demand for arbitration shall be made within a
reasonable time after the claim, dispute or other matter in question has arisen,
and in no event shall it be made after the date when institution of legal or
equitable proceedings based on such claim, dispute or other matter in questions
would be barred by the applicable statute of limitations. The Contractor shall
carry on the Work and maintain the progress schedule during any arbitration
proceedings, (provided Owner is not otherwise in breach of this Agreement) and
Owner shall continue to pay any undisputed sums to Contractor.
8.2.2.2 The foregoing notwithstanding, either party
may seek injunctive relief from a court of competent jurisdiction which may be
necessary to protect its rights under this Agreement without being required to
show any actual damages or to post an injunction bond.
CONFIDENTIAL
Page 51
ARTICLE 9. INDEMNIFICATION AND LIABILITY
9.1 INDEMNIFICATION BY CONTRACTOR. Contractor shall be liable for and
shall defend, indemnify and hold harmless the Owner and its officers, directors,
agents and employees from and against any and all claims, demands, causes of
action, losses, damages, costs and expenses (including reasonable attorney's
fees) of every kind and character arising in favor or any person including
Contractor, Owner's employees, Contractor's employees, Subcontractors or other
persons on account of personal injuries or death or damage to any property
(hereinafter "Claims") in any way incident to, arising out of, or claimed to
have arisen out of, occurring in, in connection with, or relating to the
Services performed by Contractor hereunder (including Claims in any way incident
to, arising out of, or claimed to have arisen out of, occurring in, in
connection with, or relating to the Services performed by any and all
Subcontractors), except if directly or indirectly due to Owner's or Owner's
employees' negligence. Owner shall have a direct right of action against
Contractor in the event Contractor fails to perform under this Article 9.1. and
Owner may recover all of the reasonable costs of such action, including
reasonable attorney's fees. Contractor shall obtain a written agreement from
anyone (including Subcontractors) retained or employed by Contractor which shall
include this indemnifica tion in favor of Owner.
9.1.1 Contractor further agrees to indemnify and hold Owner
harmless against the payment of any and all penalties, interest, liens or
indebtedness or claims against Owner's property, or for work performed, or
materials furnished, or measured by the work performed, growing out of or
incident to Contractor's operations hereunder. Contractor agrees to reimburse
Owner and Owner's employees for each and every reasonable cost or charge,
including court costs, all expenses of litigation
CONFIDENTIAL
Page 52
and reasonable attorney's fees, if any, which Owner, its successors, assigns or
employees, may incur in defending against or prosecuting any such claims,
demands, causes of action or suits brought pursuant to Services performed under
this Agreement.
9.1.2 Contractor shall release, indemnify, and hold the Owner
harmless from and against any and all claims arising from or relating to any
loss or damage to property of any kind owned or leased by Contractor or its
employees, servants, agents and Subcontractors unless directly or indirectly due
to Owner's or Owner's employee's negligence.
9.1.3 All obligations to assume, protect, defend, indemnify,
and save the Owner harmless shall extend to the Owner's officers, directors,
employees, agents, shareholders, and to companies and other legal entities that
control, are controlled by, are subsidiaries of, or are affiliated with Owner
and the respective officers, directors, agents, and employees of such companies
or entities and shall continue for so long as any of the named indemnities may
be subjected to claims or suits calling for such obligations, notwithstanding
the completion, acceptance or payment for the Work.
9.2 INDEMNIFICATION BY OWNER. Owner shall be liable for and shall
defend, indemnify and hold harmless the Contractor and its officers, directors,
agents and employees from and against any Claims to the extent they arise from
the negligence and/or willful misconduct of the Owner, its employees or agents.
9.3 NOTICE OF CLAIMS. Each party shall notify other promptly of written
Claims or demands of which the other party is responsible hereunder. The
indemnifying party shall have the right to defend the Claim with counsel of its
own choosing but no settlement or compromise of any Claims hereunder shall be
completed without the consent of the indemnified party.
CONFIDENTIAL
Page 53
9.4 LIMITATION OF LIABILITY. In no event shall either party hereto be
liable for any consequential, incidental, special, indirect or remote damages
including, but not limited to, loss of use, lost revenues or profits (except for
Contractor's Fee Trueup payable under Article 4.10 hereof) or interest on
borrowed funds, arising out of or in connection with its performance of this
Agreement whether arising in contract, warranty, tort (including negligence) or
strict liability.
ARTICLE 10. WARRANTY
10.1 WARRANTY. Any equipment, materials, and services supplied by
Contractor, its agents, employers, suppliers, or Subcontractors, are warranted
by Contractor or its suppliers or Subcontractors as appropriate, to be of good
quality and workmanship and will be properly installed by Contractor or its
Subcontractors as appropriate. To the extent possible, Contractor shall also
assign to Owner all manufacturers, suppliers or Subcontractor's warranties for
any services, equipment and materials. All warranties made hereunder shall be
for a minimum period of one (1) year following Owner's acceptance of the Work
for such Project unless otherwise specified in a Work Order, provided however,
that any warranty for materials or services not provided directly by Contractor
shall be the warranty of the Subcontractor or supplier which Contractor shall
pass through to Owner. Where a Certificate of Occupancy is issued by Contractor
to Owner, the warranty period shall commence upon the date the Certificate of
Occupancy is issued for equipment, materials, or services which are directly
related to such Certificate of Occupancy. Contractor shall not be obligated to
continue these warranty obligations for any equipment (including software),
materials and/or services which have been improperly repaired or altered,
abused, misused or improperly handled by Owner unless such repair or alteration
was necessitated by an act or omission of Contractor, Subcontractor or their
respective
CONFIDENTIAL
Page 54
employees or agents. Notwithstanding the foregoing, all fiber optic cable
purchased by Contractor for Owner hereunder shall have a minimum three (3) year
warranty assignable to Owner unless otherwise agreed to in a Work Order.
10.2 FREE FROM DEFECTS. The Contractor warrants to the Owner that all
materials and equipment furnished under this Agreement will be new unless
otherwise specified in a Work Order or agreement for Other Work, free from
faults and defects and in conformance with the Work Order, agreement for Other
Work and/or this Agreement. All work not conforming to these requirements,
including substitutions not properly approved and authorized, may be considered
defective and must be cured by Contractor at Contractor's expense. If required
by the Owner, Contractor shall furnish satisfactory evidence as to the kind and
quality of materials and equipment furnished hereunder.
10.3 NO OTHER WARRANTIES. EXCEPT AS OTHERWISE PROVIDED HEREIN, THE
FOREGOING WARRANTIES AND THOSE CONTAINED IN ANY WORK ORDER OR AGREEMENT FOR
OTHER WORK CONSTITUTE THE ONLY WARRANTIES WITH RESPECT TO THE WORK PERFORMED
HEREUNDER, OR ANY STATEMENT OF WORK, THERE BEING NO OTHER WARRANTIES, EXPRESSED
OR IMPLIED, INCLUDING NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
ARTICLE 11. HAZARDOUS MATERIALS AND CONCEALED CONDITIONS
11.1 HAZARDOUS MATERIALS. In the event Contractor encounters toxic or
hazardous materials in performance of any Project, any resulting delays and
costs shall be considered to be beyond its control, without its fault and
outside the scope of such Project unless such encounter is due to the gross
CONFIDENTIAL
Page 55
negligence or willful misconduct of Contractor, its employees, officers or
directors or Subcontractors. Such toxic or hazardous materials shall be removed
or otherwise dealt with by Owner or by the appropriate government agency,
organization or third party. Contractor shall have no obligation, responsibility
or liability with respect to such materials. Notwithstanding the foregoing,
Contractor agrees that it will be responsible for the cleanup or any other cost,
damage or liability arising from any toxic or hazardous materials generated or
used by Contractor, its employees or Subcontractors in the course of its
performance of any Work under this Agreement. Contractor agrees in any event to
cooperate fully with Owner and to perform reasonable and customary
investigations as to the existence of hazardous materials prior to the
performance of any Work hereunder.
11.2 CONCEALED CONDITIONS. The Contractor shall promptly, upon
discovery, and before any such conditions are disturbed, notify the Owner in
writing of: (1) subsurface or latent physical conditions at the site of Work
differing materially from those indicated in the Contract Documents, or (2)
unknown physical conditions at such site, of an unusual nature, differing
materially from those ordinarily encountered and generally recognized as
inherent in work of the character provided for in this Agreement. The Contractor
shall, at Owner's direction, promptly investigate the conditions, and if it
finds that such conditions do materially so differ and cause an increase or
decrease in the Contractor's cost of, or the time for, performance of any part
of the Work under the applicable Work Order an equitable adjustment of time
shall be made and the Work Order modified accordingly. Owner and Contractor
acknowledge that all costs incurred in investigating the conditions and
performing such Work are Reimbursable Costs.
CONFIDENTIAL
Page 56
ARTICLE 12. MISCELLANEOUS
12.1 TITLE. Title to all Work completed pursuant to a Work Order or
agreement for Other Work hereunder and to all materials and supplies on account
of which payment in full has been made by Owner shall be and vest in the name of
Owner.
12.2 ASSIGNMENT. Owner may not transfer, assign or otherwise delegate
its obligations under this Agreement without the express written consent of the
Contractor which consent shall not be unreasonably withheld; provided, however,
that Owner may assign its rights, including the obligation of payment to
Contractor and Owner's rights under any Work Order or agreement for Other Work,
under this Agreement to its subsidiaries, affiliates or successors in interest
without prior written consent of Contractor. Contractor may not transfer, assign
or otherwise delegate its obligations under this Agreement without the express
written consent of Owner which may be withheld by Owner in its sole discretion.
Any assignment by any party hereunder shall not release the assigning party from
its obligations under this Agreement.
12.3 SEVERABILITY. If any provision of this Agreement is adjudicated to
be invalid or unenforceable, the remainder shall be valid and enforceable, and
the parties shall negotiate in good faith to recreate such provision in a valid
and enforceable form to provide for the intent of such provision.
12.4 WAIVER. Failure of Owner or Contractor at any time to require
strict performance of any provision of this Agreement shall not constitute a
waiver of that provision nor in any way limit enforcement of that provision.
CONFIDENTIAL
Page 57
12.5 NOTICES. Except as otherwise set forth herein, when any notice or
other communication is required or authorized to be given hereunder, such notice
shall, for all purposes, be in writing and either delivered personally to the
addressee, by telex or facsimile transmission followed by mailing, or mailed
registered or certified mail return receipt requested, or by express mail,
postage prepaid and shall be deemed given when so delivered personally, when
such telex or facsimile transmission is received or, if mailed, five (5) days
after the date of mailing to the address of the respective parties at the
following addresses:
(i) If sent by Owner to Contractor, addressed as follows:
MFS Network Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President, Operations
With a copy to:
MFS Network Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President, Corporate and Legal Affairs
and
Able Telcom Holding Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
(ii) If sent by Contractor to Owner, addressed as follows:
WorldCom Network Services, Inc.
Purchasing & Contracts, MD 1.1-131F
CONFIDENTIAL
Page 58
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Contract Administrator
With a copy to:
WorldCom Network Services, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇
Attn: Vice President, Construction and Facilities
and
WorldCom, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Counsel for Development
12.6 CONFIDENTIALITY
12.6.1 Owner and Contractor agree to hold and will use their
commercially reasonable efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold, in
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of law, all confidential documents and information
concerning this Agreement and any Work or Project performed hereunder, except to
the extent that such information can be shown to have been (i) in the public
domain through no fault of the received party, or (ii) later lawfully acquired
by the receiving party from third parties without an obligation of
confidentiality. The obligation of Owner and Contractor to hold any such
information in confidence shall be satisfied if it exercises the same care with
respect to such information as it would take to preserve the confidentiality of
its own similar information.
CONFIDENTIAL
Page 59
12.6.2 The drawings, specifications and other documents are
instruments of service through which the Work to be performed by the Contractor
is described. The Contractor may retain one record set. The Contractor shall not
own or claim a copyright or any other right in the drawings, specifications and
other documents. All copies of them, except the record set, shall be returned to
Owner on request upon completion of the Project. The drawings, specifications
and other documents and copies thereof furnished to the Contractor, are for use
solely with respect to a Project. They are not to be used by the Contractor on
other projects without the specific written consent of the Owner. The Contractor
is granted a limited license to use and reproduce applicable portions of the
drawings, specifications and other documents prepared for a Project appropriate
to and for use in the performance of the Contractor's services under this
Agreement. All drawings, specifications and other documents relating to the
Project are owned by the Owner, including drawings, specifications and other
documents generated by Contractor for Owner or used to perform work for Owner
prior to the date of this Agreement.
12.6.3 Subject to the confidentiality requirements stated
herein, neither party shall reference or use any part of this Agreement or the
names of the parties hereto in any press release, marketing, advertising or
other sales or promotional materials without the express written consent of the
other party which will not be unreasonably withheld or delayed.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
CONFIDENTIAL
Page 60
12.8 NO CONSTRUCTION AGAINST DRAFTER. The parties acknowledge that this
Agreement and all the terms and conditions contained herein have been fully
reviewed and negotiated by the parties and that each party has been represented
by Counsel. Having acknowledged the foregoing, the parties agree that any
principle of construction or rule of law that provides that, in the event of any
inconsistency or ambiguity, an agreement shall be construed against the drafter
of the agreement shall have no application to the terms and conditions of this
Agreement.
12.9 COURSE OF DEALING. The parties acknowledge that due to the
previous relationship between Contractor and Owner, the sequence of previous
acts and conduct between Contractor and Owner related to the Work to be
performed pursuant to this Agreement and any Work Orders or agreements for Other
Work executed hereunder, is fairly to be regarded as establishing a common basis
of understanding for interpreting each party's expressions and other conduct as
further described in the Uniform Commercial Code.
12.10 SURVIVAL. The provisions of Articles 9, 10, 11 and 12 shall
survive the expiration or termination of the Agreement and Owner and Contractor
each agree to be bound thereto as appropriate.
12.11 GOVERNING LAW. The Agreement, and all the rights and duties of
the parties arising from or relating in any way to the subject matter of this
Agreement or the transaction(s) contemplated by it, shall be governed by,
construed, and enforced in accordance with the laws of the State of Delaware
(excluding any conflict of laws provisions).
12.12 ENTIRE AGREEMENT. This Agreement and all Exhibits and Schedules
attached hereto constitute the entire agreement between parties with respect to
the subject matter hereof. This Agreement shall be binding upon the parties
hereto and their permitted successors and assigns.
CONFIDENTIAL
Page 61
IN WITNESS WHEREOF, the parties hereto have executed this instrument,
through their authorized officers, effective the date first above written.
OWNER
WORLDCOM NETWORK SERVICES, INC.
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:______________________________________
CONTRACTOR
MFS NETWORK TECHNOLOGIES, INC
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:______________________________________
CONFIDENTIAL
Page 62