EXHIBIT 10.8
ILLINOIS RIVER ENERGY, LLC
CONFIDENTIAL
ADDENDUM 1
SITE SPECIFIC PRE-CONSTRUCTION ENGINEERING SERVICES
PHASE 1
This Addendum 1 ("Addendum"), entered into as of September 23, 2002, is an
amendment to the DBIA Document Number 520 -- Standard Form of Preliminary
Agreement between Owner and Design-Builder entered into and executed by the
parties hereto on June 27, 2002 (the "Preliminary Engineering Agreement").
WHEREAS, Owner and Design Builder desire to make certain modifications and
additions to the Preliminary Engineering Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. DESIGN-BUILDER'S SERVICES AND RESPONSIBILITIES
1.1 Design-Builder's responsibilities under Section 2.3 of the Preliminary
Engineering Agreement shall include the services described in this
Section 1 of this Addendum.
1.2 Design-Builder shall provide responses to the Air Permitting Information
Request as provided by ▇▇▇▇▇▇ ▇▇▇▇ on August 29, 2002 and as attached to
this Addendum 1 as Exhibit 1A;
1.3 Design-Builder shall provide services as outlined by Lurgi PSI on
September 9, 2002 and as attached to this Addendum 1 as Exhibit 1B.
2. CONTRACT TIME
2.1. Commencement - Design-Builder shall commence performance of the
services set forth in Section 1 above by September 23, 2002;
2.2. Completion - Design-Builder shall complete performance of the
services set forth in Section 1 above by November 20, 2002.
3. CONTRACT PRICE
3.1. Design-Builder shall perform the services set forth in Section 1
above for a price not-to-exceed $ 90,000;
-1-
3.2. The $ 90,000 fee associated with the services set forth in Section 1
above shall be considered part of the $ 485,000 fee set forth in Section
6.2 of DBIA Document Number 520 - Standard Form of Preliminary Agreement
Between Owner and Design-Builder, as executed on June 27, 2002.
4. PROCEDURE FOR PAYMENT
4.1. The services set forth in Section 1 above shall be performed on a
reimbursable basis, subject to the not-to-exceed contract price set
forth in Section 3 above, as proposed by Lurgi PSI on September 9, 2002
and as attached as Exhibit 1B to this Addendum, using Lurgi PSI's
Manhour Rate and Reimbursable Cost Schedule, attached as Exhibit 1C to
this Addendum;
4.2. Payment Terms
4.2.1. $ 35,000 down payment due within (5) days of execution of this
Addendum;
4.2.2. Monthly invoicing as the Work progresses with the down payment
credited against the first invoice;
4.2.3. Net sixty day terms applied to all invoices associated with the
services set forth in Section 1 above;
4.2.4. The $ 90,000 fee associated with the services set forth in Section
1 above shall be considered part of the $ 150,000 down payment set
forth in Section 7.2 of DBIA Document Number 520 - Standard Form of
Preliminary Agreement Between Owner and Design-Builder, as executed
on June 27, 2002.
4.2.5. The balance of deliverables and the associated schedule of values
shall be set forth in a separate addendum (or addenda) to
be attached to the Preliminary Engineering Agreement.
4.2.6. Design-Builder's commencement of services hereunder and Owner's
payment of the $90,000 fee shall not constitute the
Pre-Construction Release Date, which shall not occur until the
payment of the balance of the down payment described in Section 7.2
of the Preliminary Engineering Agreement or such other date as the
parties may mutually agree in writing.
-2-
5. OTHER PROVISIONS
5.1. All other provisions of DBIA Document Number 520 - Standard Form of
Preliminary Agreement Between Owner and Design-Builder, as executed on
June 27, 2002, shall remain in full force and effect.
ISSUED BY OWNER: Illinois River Energy, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Printed Name & Title: ▇▇▇▇▇ ▇▇▇▇▇▇▇, President
----------------------------------
Date: 10-23-02
----------------------------------
ACCEPTED BY DESIGN-BUILDER: Lurgi PSI, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Printed Name and Title: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, VP-Operations
----------------------------------
Date: October 24, 2002
----------------------------------
-3-
EXHIBIT 1A
ILLINOIS RIVER ENERGY
PROPOSED ETHANOL PLANT
AIR PERMITTING INFORMATION REQUEST
▇▇▇▇▇▇ BOOS PROJECT ▇▇. ▇▇▇▇▇▇▇-▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Owner/Operator: Illinois River Energy, LLC
Design Engineer: Lurgi PSI
FACILITY PRODUCTION:
ASSUMPTIONS:
- 50 million gallon/year (MMgal) of denatured fuel grade ethanol
- Plant Operation: 365 days per year; 24 hours per day; 8,760 hours per
year
NEEDED INFORMATION:
- Site Specific Process Flow Diagram
- Conceptual Site Plan and Facility Layout with Proposed Emission Point
Locations
- Estimated dried distillers grains w/ solubles (DDGS) production
- Estimated CO2 gas production (if CO2 recovery/production will be a part
of your process)
- Plant Operating Scenario (assume 8,760 hours per year or will there be
necessary shutdowns?)
PROCESS AREA INFORMATION:
1. GRAIN HANDLING AND MILLING
NEEDED INFORMATION:
- Anticipated grain receipts in bushels per year
- Assumed grain weight of 56 lbs/bushel
- Corn Storage Capacity
i. Low Moisture Corn: estimated in bushels
ii. High Moisture Corn Surge Bin: estimated in bushels
iii. High Moisture Corn Flat Storage (after grain dryer):
estimated in bushels
- Corn Loading Rate
i. Low Moisture Corn: estimated in bushels per hour
ii. High Moisture Corn: estimated in bushels per hour
- Number of grain ▇▇▇▇▇ with rate estimated in bushels/hr per mill
-4-
- Specifications for the Baghouse Systems? Configuration? Assume 2
for this process area: one for unloading process and one for
milling process
- Is there a raw grain drying process? If so, what is the heat
input (MMBTU/hr?) and VOM emission factor/estimate per bushel
dried?
FOR EACH BAGHOUSE SYSTEM:
- What is the PM/PM10 capture efficiency, X% or 100% total enclosure?
- What is the exhaust control efficiency (%) of the captured PM/PM10?
- Gas flow rate to baghouse (scfm) and temperature
- Filtering material and filtering area
- Cleaning methods/specifications
- Inlet gas temperature
2. MASH COOKING
NEEDED INFORMATION:
- Flash Tank capacity in gallons
- Estimated batch time in hours
- Exhaust configuration from cooking process.
- Exhaust composition/emission factors
- Exhaust airflow
3. FERMENTATION
NEEDED INFORMATION:
- Number of batch type tanks?
- Fermenter tank capacity in gallons per tank
- Beer well capacity in gallons
- Anticipated total batch time
- Assume CO2 is routed to a high-efficiency scrubber
- Anticipated CO2 production weight after scrubber in lbs of CO2 gas
per bushel (if this will be part of your process)
- Anticipated CO2 gas annual production in TPY (if this will be
part of your process)
- Assume emissions from process with be 100% VOM, no PM/PM10
- Verify scrubber configuration (i.e., is there just one or are
there separate CO2 and VOM scrubbers?) and what process areas
exhaust to scrubber(s)?
- Is a portion of this process routed to a thermal oxidizer or other
control device?
FOR EACH SCRUBBER (IF APPLICABLE):
- Scrubber packing type, size and height
- Scrubbant (water) flow rate
- Gas flow rate to scrubber
-5-
- Scrubber efficiency (%)
- What is the uncontrolled VOM emissions rate for scrubber(s) (process
design specific engineering estimate)?
- What is the VOM control efficiency for each scrubber?
- Are there PM emissions enter the exhaust stream?
4. DISTILLATION
ASSUMPTIONS:
- Strips the ethanol from the beer and concentrates to 188 proof.
- Production: 199+ proof fuel grade ethanol vapor
- Assume emissions are 100% VOM, no PM/PM10
NEEDED INFORMATION:
- Is there a scrubber for distillation process? Where is the
exhaust routed (i.e., process scrubber, boiler (co-gen), T.O.,
other?)
- What is the uncontrolled VOM emissions rate and VOM control
efficiency for the scrubber?
5. DDGS DRYING
NEEDED INFORMATION:
- Will there be a co-generation facility?
- Will drying process be steam driven from a co-generation facility or
will it utilize direct combustion?
- Will methanator flare be present as a backup only?
- What is the heat input capacity (MMBTU/hr) for each dryer and
number of dryers, if it will utilize direct combustion?
- What is DDGS production weight (lb per bushel of corn)?
- What is DDGS dryer annual production (tons)?
- Detailed information concerning the boiler, thermal oxidizer or
other control device, which will ultimately control the DDGS drying
process.
- Anticipated BTU content for exhaust stream to Methanator?
- What is the combustion rate for methanator flare?
6. PRODUCT STORAGE AND TRANSPORTATION
NEEDED INFORMATION - DDGS STORAGE:
- What is DDGS storage capacity?
- What is the size of loadout pit (bushel)?
- What is the loadout rate (Bu/hr)?
- Transportation? (e.g. truck and rail)
- DDGS loading period? (e.g. day or night shift)
-6-
- Verify exhaust configuration for DDGS loadout - to baghouse and/or
cyclone
- Specifications for the Baghouse Systems? Configuration? Assume 2
for this process area: one for unloading process and one for
milling process
FOR BAGHOUSE SYSTEM:
- What is the PM/PM10 capture efficiency, X% or 100% total enclosure?
- What is the exhaust control efficiency (%) of the captured PM/PM10?
- Gas flow rate to baghouse (scfm) and temperature
- Filtering material and filtering area
- Cleaning methods/specifications
- Inlet gas temperature
FOR CYCLONE SYSTEM:
- Simple or multiple cyclone system?
- Number of cyclones if multiple
- Sketch of system
- Gas flow rate
- Efficiency of cyclone
FOR ETHANOL STORAGE:
- Specification of tank (e.g. equipped with tank vents and/or
floating roofs)
- Will tanks be compliant with NSPS 40 CFR 60 Subparts A and Kb
- Specify storage systems (size, number, description of tanks)
NEEDED INFORMATION (FOR EACH TANK):
- Dimensions
- Annual number of turnovers per tank
- Number and type of tank connections, valves, fittings, access ports,
hatches, gaskets, etc.
- Proposed shell and roof color of tanks
7. PRODUCT LOADING AND FUGITIVE LEAKS
NEEDED INFORMATION:
- Annual production of Ethanol (MMgal)
- Annual DDGS production (tons)
- CO2 gas production (tons)
- How many are valves, pumps in the facility?
-7-
EXHIBIT 1B
September 9, 2002
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Illinois River Energy
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Subject: Illinois River Energy
50 MMGPY Corn-to-Ethanol Plant
Lurgi PSI Proposal No. 62177
Pre-Engineering Offer
Dear ▇▇▇▇▇,
Further to our discussions and recent exchange of e-mails regarding the level of
complexity and detail required for the permitting process, as communicated by
▇▇▇▇▇▇ Boos, the state is now requiring more information than has typically been
required for a minor source permit, in fact the level of detail they are
requesting is consistent with a facility that is being permitted as a major
source. To support this additional information required (that would typically be
completed during the detailed design), we would propose to provide the following
services to develop the necessary data to allow the air permitting process to
move along as quickly as possible:
1. Develop detailed design process flow diagrams for:
a. Grain Handling
b. Mash Cooking
c. Fermentation
d. Distillation, Dehydration, Evaporation
e. Drying
f. Misc areas, chemicals and utilities
2. Detailed manufacture's specifications for all control point equipment
(including specification, bid solicitation and selection of technology to
be utilized in facility) consisting of design information addressing
average and maximum gas stream concentrations, temperature, flow
conditions, control efficiencies, for the following equipment:
a. Grain Handling:
i. Grain Receiving Pit- evaluate dustless design
ii. Unloading Conveyor- Baghouse
iii. Grain Cleaning - Baghouse
iv. Grain Bin Leg Transfer- Baghouse
▇. ▇▇▇▇▇▇ milling - Baghouse for each mill
b. DDGS Handling:
i. Internal Operations - building ventilation
ii. Loadout - 2 Baghouses
-8-
c. Thermal Oxidizer w/ DDG Dryer Stack
d. CO2 Scrubber (fermentation)
e. Process Scrubber (distillation)
f. Ethanol Loadout (truck)
g. Ethanol Storage Tanks (190 & 200 proof)
h. Denaturant Storage Tank
i. Denatured Product Storage Tank
j. Bio-Methanator Flare
k. Cooling Tower
3. Generate calculations for fugitive emissions from valves, pumps, etc.
4. Site work required to support IRE development of site work package.
5. Three trips of two days for three people to meet to discuss all project
and permitting issues
The time required to complete the activities outlined above would require 6-8
weeks; however if we can receive authorization by September 13, 2002 we can have
the scope completed by the end of October. As we are all aware, permitting the
project lies on the critical path to beginning construction of the project, so
the sooner the application is completed the better for the project. Regarding
the actual time required to receive the air permit, I believe that ▇▇▇▇▇▇ Boos
should have a good handle on the actual time required by the state to review the
application.
The estimated cost for these services is not to exceed $90,000 with the
following clarifications:
- The scope of services quoted are estimated and that any additional special
requirements determined by the Illinois Department of Environment or
client's environmental consultant may increase the time required by Lurgi
PSI to perform the services which would increase the estimated cost of the
pre-engineering phase.
Lurgi PSI would propose that this work be performed on a reimbursable basis, per
Lurgi PSI's standard rate schedule, as included with our standard
pre-engineering agreement, with payment terms net sixty days (see attached). Per
our discussions, we ▇▇▇▇ require a downpayment of $35,000 due within 5 days of
executing our agreement. The pre-engineering fee will be credited to the lump
sum EPC contract amount on the first monthly progress payment. The fee includes
the first installment of the ICM license fee and commences the transfer of
licensed technology to Lurgi PSI.
If there are any questions regarding our proposal, please feel free to call me
at (▇▇▇) ▇▇▇-▇▇▇▇ to discuss them.
Sincerely,
Lurgi PSI, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇
Business Development Manager- Ethanol
-9-
EXHIBIT 1C
LURGI PSI, INC.
MANHOUR RATE AND REIMBURSABLE COST SCHEDULE
EFFECTIVE SEPTEMBER 16, 2002
Lurgi PSI, Inc. executes its contract work for construction and engineering
services under a standard reimbursement schedule for manhour expenditures,
direct expenses, and in-house services. We invoice all projects in accordance
with a standard invoice procedure which includes a separate listing of manhour
expenditures, direct expenses, and scheduled expense items. Lurgi PSI, Inc.
keeps full and detailed accounts and records in accordance with established
accounting procedures. Our records are available to our clients at any time for
audit and review.
1. PERSONNEL COST REIMBURSEMENT SCHEDULE
All personnel are charged to a project on an hourly basis for actual time
spent in direct support of the project. Overtime hours required by Lurgi
PSI, Inc. to support a project schedule are invoiced at standard rates
without any premium time for overtime. All classifications will be
invoiced listing the individuals who have worked on the project and number
of hours worked.
2. COSTS REIMBURSABLE AS DIRECT EXPENSES
The following items are reimbursed at Lurgi PSI's direct cost without any
additional charges for overhead or profit:
2.1 Travel expense.
2.2 Living expenses away from our office for any of our personnel.
2.3 Long distance or toll telephone calls.
2.4 Telegrams, teletype, express mail, and postage.
2.5 Any special forms of printing and office supplies.
2.6 Car mileage at 34 cents per mile.
2.7 Special client requested legal services.
2.8 Rent of offices other than Lurgi PSI, Inc. home office.
2.9 Outside reproduction, blueprint, photographic supplies or services.
2.10 Additional professional liability insurance beyond that provided in
Section 7.
2.11 Broad Form Endorsement CGL insurance for construction activities.
-10-
2.12 Additional Umbrella Liability insurance and specialized insurance.
2.13 Losses not covered by insurance maintained to jointly protect Owner
and Lurgi PSI, Inc.
2.14 Permits, licenses, inspections, and other fees.
2.15 Replacement of work not covered by project insurance.
2.16 Additional automobile liability insurance.
2.17 Field personnel costs including:
o Transportation and travel expenses for husband and wife
relocation trips to evaluate housing.
o Moving expense per field employee for relocation to the job
site based on three competitive quotes.
o Per diem expenses for each day of assignment beginning with
two weeks from date of relocation and terminating upon end
of assignment. Per diem rates will be calculated in
accordance with federal guidelines Publication 1542, Per
Diem Rates for Travel within the Continental United
States. Should field employees be required for a duration
in excess of 12 months a taxable allowance will be
negotiated.
o Moving expenses per field employee for relocation from the job
site.
3. COSTS REIMBURSABLE AS A SCHEDULED EXPENSE ITEM
The following items are internally produced and billed at the
approximate cost per unit (square foot, copy, hour, etc.) to Lurgi PSI,
Inc. including materials and machine time utilized:
3.1 DRAWING REPRODUCTION COSTS
3.1.1 Bond $ .17 per sq. ft.
3.1.2 Vellum $1.00 per sq. ft.
3.1.3 Mylar $ 1.75 per sq. ft.
3.2 PHOTOCOPIES $ .10 per copy
3.3 CD CREATION $10.00 each CD
3.4 FACSIMILE $2.00 per minute
3.5 VIDEO CONFERENCING $2.00 per minute ($120 per hour)
4. COSTS REIMBURSABLE AS DIRECT EXPENSES PLUS A FEE
-11-
The following items are expenses which are to be reimbursed at cost plus a
fixed fee:
4.1 Owner Requested Subcontracts
4.2 Purchased Equipment
4.3 Rental Equipment
5. INVOICING
Normal invoicing procedures call for manhours completed on the project and
reimbursable expenses to be billed monthly. The invoice will list all
manhour charges and reimbursable expenses against the project to date,
both billed and current. Standard invoices will detail the charges to the
project and will not contain copies of any receipts or documentation.
Sample invoices are available upon request. Documentation for all billable
items will be included with standard invoices for a fee of $2.00 per 8 1/2
x 11 sheet.
6. SCHEDULE REVISIONS
The rate schedule is subject to yearly revisions during the first billing
period containing the first day of September. These adjustments will
reflect increased costs due to promotions, merit increases, etc. Any other
changes in the Rate Schedule are subject to approval of the Owner.
7. COSTS ASSOCIATED WITH INSURANCE
Lurgi PSI, Inc. provides the following level of insurance as standard
on all projects without any additional reimbursement under our Standard
Agreement for Professional Services:
7.1 ▇▇▇▇▇▇▇'▇ Compensation Insurance as required by law.
7.2 Comprehensive General Liability Insurance at limits of $500,000 per
occurrence for bodily injury and property damage with a broad form
endorsement for property damage, products, completed operations,
premises, blanket contractual, independent construction and XCU.
7.3 Comprehensive Automobile Liability Insurance covering all owned,
non-owned, and hired vehicles at limits of $100,000 each person;
$300,000 each accident for bodily injuries and $100,000 each
accident for property damage.
-12-
7.4 Umbrella Liability is provided to cover any legal liability that may
exceed the underlying limits of insurance coverages. The aggregate
limit of the Umbrella liability policy shall be $1 million.
7.5 Professional liability insurance is provided through self-insurance
by Lurgi PSI, Inc. for $100,000 or up to the full value of Lurgi
PSI's fee for services to a maximum of $1,000,000, as a standard
part of our Professional Services Agreement. Any additional
Professional Liability Insurance requested by the Owner will be
furnished as a direct reimbursable expense per paragraph 2.0 above.
7.6 Project Professional Liability, Wrap-up Insurance, or any other
additional insurance requested by Owner will be furnished as a
direct reimbursable expense per paragraph 2.0 above.
8. RATE SCHEDULE BY CLASSIFICATION
Consolidated Rate Schedule, effective September 16, 2002:
SENIOR PROJECT ENGINEER/SPECIALIST AND ABOVE $105
PROJECT ENGINEER/SPECIALIST $99
PROJECT/AREA COORDINATOR $88
ESTIMATOR $82
SENIOR ENGINEER/SPECIALIST $78
PROJECT SUPERINTENDENT $78
SENIOR DESIGNER $76
COST CONTROL $76
SUPERINTENDENT $76
SAFETY COORDINATOR $76
QA/QC COORDINATOR $76
EQUIP/TOOLS SUPERINTENDENT $76
PURCHASING AGENT/EXPEDITOR $68
ENGINEER/SPECIALIST $68
STEEL DETAILING $68
DESIGNER $61
CADD SPECIALIST $53
ADMINISTRATIVE COORDINATOR $53
ACCOUNTING $53
SUPPORT $45
-13-
================================================================================
Design-Build Manual of Practice
Document Number 520
================================================================================
STANDARD FORM OF
PRELIMINARY AGREEMENT
BETWEEN OWNER AND
DESIGN-BUILDER
STANDARD FORM AGREEMENT BETWEEN
OWNER AND DESIGN-BUILDER
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. CONSULTATION WITH
AN ATTORNEY IS RECOMMENDED WITH RESPECT TO ITS COMPLETION OR MODIFICATION.
================================================================================
This AGREEMENT is made as of the 27th day of June in the year of 2002, by and
between the following parties, for services in connection with the Project
identified below.
OWNER:
(NAME AND ADDRESS)
Illinois River Energy, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ph. (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
DESIGN-BUILDER
(NAME AND ADDRESS)
Lurgi PSI, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ph. (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
PROJECT
(INCLUDE PROJECT NAME AND LOCATION
AS IT WILL APPEAR IN THE CONTRACT
DOCUMENTS)
Design and construction of a new 50 MMGPY dry mill fuel grade ethanol plant,
designed for expansion, to be located in Northern Illinois.
In consideration of the mutual covenants and obligation contained herein, Owner
and Design-Builder agree as set forth herein.
-14-
ARTICLE 1
GENERAL
1.1 BACKGROUND. Owner is a Delaware limited liability company
organized with the intention of developing, owning and operating a 50 MMGPY
anhydrous denatured dry mill fuel grade ethanol plant, designed for expansion,
in Northern Illinois at a site to be selected and provided by Owner.
Design-Builder is a Tennessee corporation and is an engineering and construction
firm experienced in developing ethanol plants, in providing engineering and
design services for ethanol plants, and in constructing ethanol plants.
Design-Builder has had preliminary discussions with ICM, Inc. ("ICM") regarding
ICM's furnishing and providing process engineering and technology, equipment
planning and specifications, distillers grains dryers with a thermal oxydizer,
and wastewater treatment equipment in connection with this Project.
1.2 DUTY TO COOPERATE. Owner and Design-Builder each agree to use
commercially reasonable efforts in developing the Project. Owner and
Design-Builder commit at all times to cooperate fully with each other, and
proceed on the basis of trust and good faith to permit each party to realize the
benefits afforded under this Agreement.
1.3 EXCLUSIVITY. Owner agrees that Design-Builder will design and
build the Ethanol Plant if the Project is determined by Owner to be feasible in
its discretion, reasonably exercised, and if Owner obtains adequate financing
for the Project. During the term of this Agreement, Design Builder agrees that
it will not design and build or otherwise assist in the development of a fuel
grade ethanol plant within fifty (50) miles of the City of ▇▇▇▇▇▇▇▇ in the State
of Illinois, other than the ▇▇▇▇, Illinois project.
1.4 NO OBLIGATION TO PROCEED. Notwithstanding anything herein to the
contrary, Design-Builder agrees that Owner is under no obligation to proceed
with the Project, and that Owner may cease all or any portion of its activities
in connection with the Project at any time, at Owner's sole and absolute
discretion. Except as specifically identified in Sections 6.2, 8.7.1B, 8.7.4 and
8.7.10 (as and if applicable) of this Agreement, Owner shall not be liable to
Design-Builder or its agents, Subcontractors or their agents and
Sub-Subcontractors (including ICM) for any liability, damage, cost, expense, or
loss incurred or suffered by Design-Builder or such person as a result of or
related to Owner's decision to not go forward with the Project or for services
provided to Owner related to the Project.
1.5 CONTRACT DOCUMENTS. Promptly following Owner's determination
that the Project is feasible and that adequate financing for the Project has
been or will likely be obtained, Owner and Design-Builder agree to enter into an
agreement between Owner and Design Builder to design and construct the Project
and complete the Work based on DBIA Document No. 525, STANDARD FORM OF AGREEMENT
BETWEEN OWNER AND DESIGN-BUILDER - LUMP SUM (1998 Edition), as modified by the
parties by mutual agreement, and attached hereto as EXHIBIT A, with the
accompanying General Conditions of Contract based on DBIA Document No. 535,
STANDARD FORM OF GENERAL CONDITIONS OF CONTRACT BETWEEN OWNER AND DESIGN-BUILDER
(1993 Edition), as modified by the parties by mutual agreement and attached
hereto as EXHIBIT B ("General Conditions of Contract"), each in form reasonably
acceptable to both Owner and Design Builder, provided that the Contract
Documents shall contain the Contract Price, Contract Time, Minimum Project Scope
and Specifications, Performance Standards and Guarantees, and other provisions
set forth in this Agreement (unless the parties mutually agree to modify such
terms).
-15-
1.6 DEFINITIONS. Terms, words and phrases used in this Agreement
shall have the meanings given them in the General Conditions of Contract, unless
stated otherwise herein.
ARTICLE 2
DESIGN-BUILDER'S SERVICES AND RESPONSIBILITIES
2.1 DESIGN AND CONSTRUCTION OF PROJECT. Design-Builder shall,
consistent and in compliance with all applicable laws and with the care and
skill that at least equals the professional standards for such services
ordinarily used by members of the design, engineering and construction
professions under similar conditions and commensurate with the sophistication
and size of the Project, perform or furnish all design, engineering, procurement
and construction services to design and construct the Project and the entire
Work in accordance with the following terms and specifications (collectively the
"Owner's Project Criteria"):
.1 at the Contract Price set forth in Section 6.1 of this
Agreement, provided further that, except for those items
specifically listed as an Owner Responsibility item on EXHIBIT C
attached hereto, Design-Builder is responsible for all items to
design and construct the Project and entire Work at the Contract
Price;
.2 in accordance with a schedule and by a date of Substantial
Completion of the Project and the entire Work upon which the
Contract Price for the Project is based, as required by the
Contract Time provisions set forth in Section 5.3 of this
Agreement. The definition of Substantial Completion shall be as
mutually agreed upon in the Contract Documents, but meaning
generally as provided in Section 1.2.11 of EXHIBIT B. Failure to
meet the Contract Time provisions will subject Design-Builder to
delay damages as provided in either this Agreement or the other
Contract Documents;
.3 using ICM and other reputable technology providers as the
process design engineer and process design technology provider,
pursuant to a contractual relationship with ICM that provides
that the Project and entire Work will be completed in accordance
with the provisions of this Agreement including without
limitation Article 4, Article 5 and Section 1.4, and
Design-Builder shall furnish Owner upon request with redacted
copies of its contracts with ICM and other technology providers
to confirm compliance with this provision;
.4 in accordance with the Minimum Project Scope and Specifications
set forth on EXHIBIT D attached hereto; provided that
Design-Builder will diligently continue to assist Owner in
further developing Owner's Project Criteria, shall review and
prepare a written evaluation of such criteria, including
recommendations to Owner for different and innovative approaches
to the design and construction of the Project. The parties shall
meet to discuss Design-Builder's written evaluation of Owner's
Project Criteria and agree upon what revisions, if any, should
be made to such Criteria. These services shall not be deemed to
be an Additional Service, provided that a change in scope shall
result in an adjustment to the Contract Price and Contract Time
as appropriate; and
-16-
.5 the Project and the entire Work shall meet or exceed the
Performance Standards and Guarantees criteria set forth on
EXHIBIT E attached hereto by the earlier of thirty (30) days
from the date of Substantial Completion or thirteen (13) months
following the Date of Commencement, unless such dates have been
extended in accordance with the terms of this Agreement and the
other Contract Documents. Failure to meet the Performance
Guarantees will subject Design-Builder to performance damages
and other Owner remedies as mutually agreed to in the other
Contract Documents.
2.2 PRE-CLOSING SERVICES. Design-Builder shall, in a timely,
diligent and professional manner in accordance with Section 2.1 and free of
charge as part of its Contract Price, provide reasonable assistance to Owner in
the areas identified in EXHIBIT C for the purpose of meeting the overall project
schedule. For example, Design-Builder will assist in the development of a
specification for the soil analysis package, assist in the development of scope
of environmental permitting agencies, review the soil analysis as prepared by
Owner or soil engineer retained by Owner, assist in site analysis and site
lay-out, assist in writing and provide technical data and site lay-out for all
permits including the air permit. Owner agrees that Owner shall be responsible
for all third-party development and consulting costs for those items listed on
EXHIBIT C as "Owner's Responsibilities" and for those items listed in Section
3.2 below. Design-Builder shall not have authority to contract with any third
party to provide services to the Project or to act on behalf of or to otherwise
bind Owner with respect to any services or costs in connection with the Project,
without the prior written consent of Owner.
2.3 SITE SPECIFIC PRE-CONSTRUCTION ENGINEERING SERVICES. In
accordance with the Contract Time provision of Section 5.2 of this Agreement,
Design-Builder shall in a timely, diligent and professional manner in accordance
with Section 2.1 complete the following:
2.3.1 PROCESS DESIGN SERVICES. Design-Builder shall perform or
furnish through its contract with ICM and other technology provider, consistent
with applicable state licensing laws, all process design services, including
structural, mechanical, civil, and electrical engineering and other design
professional services, required to design and construct the Project and the
entire Work in accordance with this Agreement.
2.3.2. SCHEMATIC AND DESIGN DOCUMENTS. Design-Builder shall
perform or furnish through its contract with ICM or other technology provider
all structural, mechanical, civil, process, and electrical engineering services
to prepare Schematic and Design Documents based on Owner's Minimum Project Scope
and Specifications, Minimum Performance Standards and Guarantees and other terms
set forth in this Agreement. The Schematic and Design Documents shall include
design criteria, detail plans, drawings, diagrams and specifications describing
the requirements for construction of the Project and the Work in accordance with
or pursuant to this Agreement. The parties shall meet to discuss the Schematic
and Design Documents and agree upon what revisions, if any, should be made.
Design-Builder shall perform such agreed-upon revisions.
2.3.3. CONSTRUCTION DOCUMENTS. Based on Owner's Project
Criteria, the Schematic and Detailed Design Documents as may be revised pursuant
to Sections 2.3.2 above, and any other documents upon which the parties may
agree, Design-Builder shall prepare Construction Documents based on Owner's
Minimum Project Scope and Specifications, Minimum Performance Standards and
Guarantees and other terms of this Agreement. The Construction Documents shall
include detailed
-17-
design criteria, drawings, diagrams and specifications describing the
requirement for construction of the Project and the Work. The parties shall meet
to discuss the Construction Documents and agree upon what revisions, if any,
should be made. Design-Builder shall perform such agreed-upon revisions. The
Construction Documents shall include all other information reasonably necessary
for the parties to enter into the Contract Documents described in Section 1.5 of
this Agreement.
2.3.4 DISCLAIMER OF OTHER WARRANTIES. EXCEPT AS EXPRESSLY
STATED IN THIS AGREEMENT OR IN THE CONTRACT DOCUMENTS, ALL OTHER WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR USE FOR THE PURPOSE INTENDED, ARE EXPRESSLY EXCLUDED. THE LIABILITY OF
DESIGN-BUILDER UNDER AND IN CONNECTION WITH THE SITE SPECIFIC PRE-CONSTRUCTION
ENGINEERING SERVICES IS LIMITED TO THE CORRECTION OF ANY DEFECTS IN THE
ENGINEERING SERVICES OR DOCUMENTS DELIVERED TO OWNER UNDER THIS AGREEMENT,
PROVIDED NOTICE OF ANY DEFECTS IS GIVEN TO DESIGN-BUILDER WITHIN 180 DAYS FROM
PERFORMANCE OF SUCH SERVICES OR DELIVERY OF SUCH DOCUMENTS.
ARTICLE 3
OWNER'S SERVICES AND RESPONSIBILITIES
3.1 TIMELY PERFORMANCE. Owner shall throughout the performance of
this Agreement cooperate with Design-Builder. Owner shall perform its
responsibilities, obligations and services, including its reviews and approvals
of Design-Builder's submissions, in a timely manner so as not to delay or
interfere with Design-Builder's performance of its obligations under this
Agreement.
3.2 OWNER PROVIDED INFORMATION. Owner shall use commercially
reasonable efforts to provide, at its own cost and expense, for Design-Builder's
information and use the following, all of which Design-Builder is entitled to
rely upon in performing its obligations hereunder:
.1 Surveys describing the property, boundaries, topography and
reference points for use during construction, including existing
service and utility lines;
.2 Geotechnical studies describing subsurface conditions, and other
surveys describing other latent or concealed physical conditions
at the Site;
.3 Temporary and permanent easements, zoning and other requirements
and encumbrances affecting land use, or necessary to permit the
proper design and construction of the Project;
.4 A legal description of the Site;
.5 To the extent available, as-built and record drawings of any
existing structures at the Site; and
-18-
.6 To the extent available, environmental studies, reports and
impact statements describing the environmental conditions,
including Hazardous Conditions, in existence at the Site. If
Owner does not provide the above described environmental studies
or reports to Design-Builder, then Design-Builder shall be
entitled to a change order as to price and schedule if and to
the extent any environmental hazards or other environmental
conditions are encountered at the Project site which adversely
affect the Work.
ARTICLE 4
OWNERSHIP OF WORK PRODUCT
4.1 WORK PRODUCT. Other than the licensed technology defined in the
license agreement that Owner will receive from Design-Builder under Section
4.2.1 below or other proprietary technology or information supplied as part of
the Project, all of which shall remain the property of Design-Builder or its
Subcontractors, as the case may be, all designs, plans, drawings,
specifications, documents, models, photographs (including negatives) electronic
data and other work products of Design-Builder, including those prepared by
Design-Builder's consultants and Subcontractors and their agents and
Sub-Subcontractors, are instruments of service for this Project, whether or not
the Project is completed, and shall become the property of Owner along with all
copyrights therein upon payment by Owner as required under this Agreement.
Design-Builder shall make all necessary arrangements in any contracts it has
with Design-Builder's consultants and Subcontractors or others (and shall cause
such persons to make such arrangements in any contracts between them and their
agents) to provide for such rights of the Owner. The Owner is entitled to
possession of such work products upon completion, termination of the Project, or
Owner's request, whichever occurs first, provided payment to Design-Builder has
been made as required under this Agreement.
4.2 PROPRIETARY LICENSED TECHNOLOGY. With respect to the licensed
technology and all other technology or proprietary information reasonably
necessary to operate the Project in accordance with this Agreement, Design -
Builder shall make all necessary arrangements in any contracts it has with ICM
(or other Subcontractors as applicable) to ensure that:
.1 Owner will have a royalty-free license to use the licensed
technology or other proprietary information for the life of the
Project;
.2 Owner may use all designs, plans, drawings, specifications,
documents, models, photographs (including negatives) electronic
data and other work products constituting the licensed
technology or other proprietary technology of Design-Builder or
its Subcontractors, as the case may be, for routine maintenance
and "de-bottlenecking" of the Project, without a requirement of
utilizing Design-Builder or ICM (or other applicable
Subcontractor); and
.3 Owner shall not be able to utilize the licensed technology for
any project or plant other than the Project;
-19-
provided that the provisions of this Section 4.2. shall be more particularly
provided for in license agreement or agreements mutually acceptable to Owner and
Design - Builder and its Subcontractors, as the case may be.
ARTICLE 5
CONTRACT TIME
5.1 INITIAL COMMENCEMENT DATE. Design-Builder shall commence
performance of the services set forth in Section 2.2 of this Agreement promptly
following execution of this Agreement by the parties.
5.2 PRE-CONSTRUCTION RELEASE DATE. Design-Builder shall commence
performance of the services set forth in Section 2.3 of this Agreement within
five (5) days of Design-Builder's receipt of Owner's written release of the Site
Specific Pre-Construction Engineering Services ("Pre-Construction Release
Date"), unless the parties mutually agree otherwise in writing. Design-Builder
shall complete such services no later than ninety (90) calendar days following
the Pre-Construction Release Date, as such date may be extended in accordance
with the terms of this Agreement and the other Contract Documents.
5.3 DATE OF COMMENCEMENT. Design-Builder shall commence construction
of the Project and the Work within five (5) days of Design-Builder's receipt of
Owner's Notice to Proceed ("Date of Commencement") unless the parties mutually
agree otherwise in writing. Design-Builder shall complete construction of the
Project and the entire Work and achieve Substantial Completion of the Project
and the entire Work no later than thirteen (13) months after the Date of
Commencement, as such date may be extended in accordance with the terms of this
Agreement and the other Contract Documents. Provided, Design-Builder shall not
be obligated to commence construction unless and until Owner is in receipt of
binding commitments for the debt and equity capital needed to construct the
Project and provide sufficient working capital for the initial start-up of the
Project (an executed commitment letter from a lender for the debt financing of
the Project shall constitute a binding commitment of debt capital for this
purpose). Provided, further, that Design-Builder shall not be obligated to
commence construction (and the 13-month maximum construction period shall not
start to run) before the end of the 90-day period following the Pre-Construction
Release Date.
ARTICLE 6
CONTRACT PRICE
6.1 CONTRACT PRICE - DESIGN-BUILD LUMP SUM TOTAL. The Contract Price
for design and construction of the Project and the entire Work is a fixed lump
sum amount of Fifty Three Million Five Hundred Thousand Dollars
($53,500,000.00), as may be adjusted in accordance with the terms of this
Agreement and the other Contract Documents.
6.2 CONTRACT PRICE - SITE SPECIFIC PRE-CONSTRUCTION ENGINEERING
SERVICES. The Contract Price - Site Specific Pre-Construction Engineering
Services described in Section 2.3 hereof is as set forth below, provided that
the Contract Price - Site Specific Pre-Construction Engineering Services shall
be
-20-
applied as a credit against the Contract Price - Design Build Lump Sum Total in
Section 6.1 if the Project reaches financial closing:
$485,000 - WITH A SCHEDULE OF VALUES AND DELIVERABLES OVER THE 90-DAY
PERIOD TO BE MUTUALLY AGREED UPON AND ATTACHED AS AN ADDENDUM HERETO.
6.3 SCOPE OF CONTRACT PRICE. The Contract Price identified in
Section 6.1 above shall be the full compensation due Design-Builder for the
performance of all services set forth in or provided pursuant to this Agreement,
but shall be deemed to exclude all the sales, use, consumer and other taxes
mandated by applicable Legal Requirements, which taxes shall be the
responsibility of the Owner. The Contract Price shall be adjusted to reflect any
Additional Services agreed upon by the parties after execution of this
Agreement.
ARTICLE 7
PROCEDURE FOR PAYMENT
7.1 CONTRACT PRICE. Design-Builder and Owner specifically confirm
their agreement (without creating any negative implication for any such
provision not so specifically confirmed) of the procedure for payment outlined
in EXHIBIT A for the Contract Price, except as may be mutually modified by the
parties.
7.2 SITE SPECIFIC PRE-CONSTRUCTION ENGINEERING SERVICES.
Design-Builder and Owner agree upon the following method for partial and final
payment to Design-Builder for the Site Specific Pre-Construction Engineering
Services:
$150,000 TO BE PAID ON THE PRE-CONSTRUCTION RELEASE DATE, WITH THE
BALANCE TO BE PAID UPON COMPLETION OF THE DELIVERABLES IN ACCORDANCE WITH THE
SCHEDULE OF VALUES TO BE ATTACHED HERETO AS AN ADDENDUM, PAYMENT TERMS NET 10
DAYS FROM THE DATE OF INVOICE.
7.2.1 INTEREST ON PRE-CONSTRUCTION ENGINEERING SERVICES.
Payments due and unpaid by Owner to Design-Builder shall bear interest
commencing thirty (30) days after payment is due at the rate of prime rate of
interest (as published in the Wall Street Journal on the due date) plus 1.5%.
7.3 PAYMENT WARRANTIES. Design - Builder warrants that title to all
Work covered by an Application for Payment will pass to Owner no later than the
time of payment. Design - Builder further warrants that upon submittal of an
Application for payment all Work for which payments have been received from
Owner shall be free and clear of liens, claims, security interests or
encumbrances in favor of Design - Builder or any other person or entity
performing construction or furnishing materials or equipment or services
relating to the Work.
ARTICLE 8
OTHER PROVISIONS
-21-
8.1 DISPUTE RESOLUTION. The parties agree that any claim, dispute or
controversy arising out of or relating to this Agreement or the breach thereof
or the performance or non-performance of the Work shall first be submitted to
non-binding mediation administered by the American Arbitration Association
("AAA") pursuant to the Construction Industry Mediation Rules then in effect.
Any claim, dispute, or controversy arising out of or relating to this Agreement
or the breach thereof which has not been resolved by mediation shall be
submitted to binding arbitration administered by the AAA pursuant to the
Construction Industry Arbitration Rules then in effect. The decision of the
arbitration tribunal shall be final and binding upon the parties and judgment
upon the award rendered may be entered by either party and enforced in any court
having competent jurisdiction. The arbitrator(s) shall be proscribed from
awarding damages not permitted by or in excess of those permitted under this
Agreement. The parties shall share the procedural costs of the arbitration
equally unless the arbitrator(s) decide otherwise. Each party shall pay its own
attorney's fees and costs incurred by it relating to the arbitration.
8.2 ASSIGNMENT. Neither Design-Builder nor Owner shall without the
written consent of the other party assign, transfer, or sublet any portion or
part of its obligations under this Agreement, except that Owner at its sole
discretion may assign this Agreement to lenders to or purchasers of the Project
without the consent or permission of Design-Builder. Notwithstanding the
foregoing, this Agreement may not be assigned to any competitor of the
Design-Builder.
8.3 GOVERNING LAW. This Agreement shall be governed by the laws of
the place of the Project, without giving effect to its conflict of law
principles.
8.4 SEVERABILITY. If any provision or any part of a provision of
this Agreement shall be finally determined to be superseded, invalid, illegal,
or otherwise unenforceable pursuant to applicable laws by any authority having
jurisdiction, such determination shall not impair or otherwise affect the
validity, legality, or enforceability of the remaining provisions or parts of
the provision of this Agreement, which shall remain in full force and effect as
if the unenforceable provision or part was deleted.
8.5 AMENDMENTS. This Agreement may not be changed, altered, or
amended in any way except in writing signed by a duly authorized representative
of both parties.
8.6 ENTIRE AGREEMENT. This Agreement forms the entire agreement
between Owner and Design-Builder. No oral representations or other agreements
have been made by the parties except as specifically stated in this Agreement.
8.7 OTHER PROVISIONS. Other provisions, if any, are as follows:
8.7.1.A INDEMNIFICATION BY DESIGN-BUILDER. To the fullest extent
permitted under this Agreement, except to the extent caused by the uncured
failure of the Owner to make payment when required by the Contract Documents,
the Design-Builder shall indemnify and defend the Owner, its officers,
directors, assigns, lenders, agents, and employees from any claims, liens,
charges (including reasonable attorneys' fees) or encumbrances (including but
not limited to mechanic's and materialmen's liens or bond claims) arising out of
or in connection with the negligent acts or omissions in the performance of the
Work by the Design-Builder and its Subcontractors, except for any claim arising
solely from the gross negligence or intentional misconduct of Owner. Upon
request of the Owner, the Design-Builder shall within 60 days remove by payment
or bonding any liens filed against the Owner or
-22-
its property as a result of the actions or omissions of the Design-Builder. If
the Design-Builder fails to do so, the Owner is authorized by the Design-Builder
to remove or satisfy any such liens, and the Design-Builder shall pay to the
Owner all costs and damages incurred by the Owner to do so, including attorneys'
fees. The Design-Builder is not required to insure over the indemnity
obligations to the extent such obligations are imposed in this Subparagraph
8.7.1.
8.7.1.B INDEMNIFICATION BY OWNER. To the fullest extent
permitted under this Agreement, the Owner shall indemnify and defend the
Design-Builder, its officers, directors, assigns, agents, and employees from any
claims, liens, charges (including reasonable attorneys' fees) or encumbrances
(including but not limited to mechanic's and materialmen's liens or bond claims)
arising out of or in connection with the negligent acts or omissions of the
Owner in connection with the Project, except for any claim arising solely from
the gross negligence or intentional misconduct of Design-Builder.
8.7.2 ACCESS TO BOOKS AND RECORDS. The Owner shall have the
right, upon reasonable notice and at regular business hours, to inspect and copy
the books and records (however kept) of the Design-Builder for verification of
Work done on a non-fixed price basis and, with respect to Work done on a
fixed-price basis, such non-cost books and records reasonably requested by Owner
for a proper purpose related to the Project. The Design-Builder shall keep books
and records adequate to support its costs and charges to Owner, if any, on a
non-fixed price basis, to comply with generally accepted accounting principles,
and to evidence compliance with this Agreement. At the Owner's reasonable
request, the Design-Builder shall promptly provide evidence satisfactory to the
Owner of the Design-Builder's compliance with the Contract Documents.
8.7.3 [INTENTIONALLY OMITTED]
8.7.4 TERMINATION. This Agreement may be terminated by the
Owner with or without cause upon at least thirty (30) days written notice to the
Design-Builder. In the event that an attempted termination by Owner under
paragraph 8.7.4 is found to be improper, the termination shall be deemed a
termination for convenience. In the event of a termination pursuant to this
paragraph prior to the Pre-Construction Release Date, Owner shall not be liable
to Design - Builder for any services provided to Owner under this Agreement.
Provided, however, that if Owner has available cash remaining from its initial
seed money funding in an amount sufficient to pay Design - Builder for services
provided to Owner under Section 2.2 (and no representation or warranty that any
such funds will be available is hereby made), Owner shall pay Design - Builder
for such services on a reasonable time and materials basis. In the event of a
termination following the Pre-Construction Release Date but prior to the Date of
Commencement, Owner shall be liable to Design-Builder only for the Site Specific
Pre-Closing Engineering Services completed prior to the Design-Builder's receipt
of the notice of termination, in amount equal to the percentage of completion
for such services as calculated based on the Schedule of Values to be attached
hereto as an addendum pursuant to Section 6.2 hereof. In no event shall Owner be
liable to Design-Builder for profit or overhead on Work not completed or on the
Contract Price - Lump Sum total.
8.7.5 SEC REGISTRATION STATEMENT. Design-Builder acknowledges
and agrees that Owner intends to file a registration statement with the United
States Securities and Exchange Commission ("SEC") and certain state securities
commissions, to register its securities under the
-23-
Securities Act of 1933, as amended. Further, if Owner reaches financial closing,
Owner will be required to register and submit various filings under the
Securities Exchange Act of 1934, as amended. Pursuant to these registrations,
Owner will be required to file a copy of certain agreements it has entered into,
including this Agreement, which will become available to the public upon filing.
Design-Builder agrees and consents to such filings, and agrees to advise its
agents, Subcontractors and their agents and Sub-subcontractors (or cause them to
be so advised) of such filings. Notwithstanding the foregoing, Owner agrees to
take commercially reasonable efforts to seek confidential treatment for such
provisions of this Agreement as Owner and Design-Builder reasonably agree may be
entitled to such treatment. Design-Builder acknowledges that confidential
treatment may not be available for certain provisions of this Agreement, for
transactions between related parties, as defined in the Securities Act of 1933,
as amended, or may be denied by the SEC, but Owner shall promptly notify
Design-Builder if such confidential treatment is denied or is otherwise not
available and shall reasonably cooperate with Design-Builder's own efforts, if
any, to seek confidential treatment of such information.
8.7.6 INSURANCE. Design-Builder shall maintain the insurance
coverages listed in EXHIBITS A and B at no less than $1,000,000 during the
performance of the services required by Sections 2.2 and 2.3 of this Agreement,
and such insurance policies shall not be cancelled or materially changed without
thirty (30) days' notice to Owner. Prior to any Work to be performed at the
Project site, Owner shall obtain and maintain Builder's Risk Insurance to cover
the loss of property incident to the Work, naming Owner, Design-Builder and
Subcontractors as co-insured. At least fifteen (15) days' prior to any Work to
be Performed at the Project site, Owner shall provide Design-Builder with a copy
of the Builder's Risk Insurance policy. All the insurance policies required
under this Agreement shall include a waiver of subrogation in favor of Owner and
Design-Builder, except where barred by applicable law, irrespective of fault or
negligence of any co-insured.
8.7.7. COMPLETENESS OF PRELIMINARY ENGINEERING. Except as
expressly provided in this Agreement, Design-Builder undertakes no liability
under this Agreement for the completeness, correctness or sufficiency for any
purpose of the preliminary engineering prepared by Design-Builder. Except as
expressly provided in this Agreement, all warranties, guarantees and liabilities
of Design-Builder with respect to or in connection with the preliminary
engineering provided by Design-Builder under this Agreement shall come into
existence only upon the Contract Documents having become effective and then
shall be limited as agreed therein.
8.7.8 EXCLUSION OF CONSEQUENTIAL DAMAGES. Notwithstanding any
other provision of this Agreement, neither party shall have any liability
whatsoever to the other for loss of production, loss of income, loss of profit,
loss caused by plant shutdown, delayed opening, business interruption or other
delay or for any other special, indirect, incidental or consequential loss or
damage, or for any exemplary or punitive damages. The limitations on and
exclusions of damages set forth in this Agreement shall apply under any theory
of law including breach of contract or warranty, tort (including negligence of
any nature, whether sole or concurrent), strict liability or otherwise.
8.7.9 OVERALL LIMIT OF LIABILITY. The cumulative maximum
liability of Design-Builder with respect to claims and costs arising out of or
incurred in connection with this Agreement or arising out of the performance or
non-performance of the services hereunder, whether based on contract, warranty,
tort (including negligence of any nature, whether sole or concurrent), strict
liability or otherwise, shall not exceed in the aggregate an amount equal to
twenty percent (20%) of the total fees
-24-
paid to Design - Builder under this Agreement. In addition to all other
liabilities, specifically included in the aggregate liability of Design -
Builder are liabilities for indemnities hereunder and warranties hereunder. The
parties agree that this overall limit of liability applies to the services
provided pursuant to Sections 2.2 and 2.3 hereof, but shall not apply to the
design and construction of the Project and the entire Work pursuant to the terms
of EXHIBITS A and B as mutually modified by the parties and the other Contract
Documents entered into pursuant hereto, which other Contract Documents shall
contain such overall limit of liability provisions as mutually acceptable to the
parties.
8.7.10 CONFIDENTIALITY.
8.7.10.1 Each party, for itself and its respective
employees, agents and representatives, agrees to hold in strict confidence and
not to disclose to any third party except as permitted hereunder, and shall not
use for any purpose other than in connection with the activities contemplated by
this Agreement, any confidential or proprietary information of the other party
or its affiliates ("Confidential Information") disclosed to or acquired by the
receiving party after the date of this Agreement. Confidential Information may
include, but is not limited to, business information, information concerning
plant and equipment designs, flow sheets, drawings, processing equipment and
requirements, processing conditions, reactants, ingredients, raw materials,
material balances, intermediate and processed product or by-product and other
matters generally pertaining to the disclosing party's products and processes.
Confidential Information shall also include confidential and proprietary
information of any Subcontractor of the disclosing party (such as ICM or other
technology provider for the Project with respect to the Design - Builder). The
receiving party will limit access to the disclosing party's Confidential
Information to those of the receiving party's employees, agents,
representatives, consultants, prospective investors and/or lenders for the
Project, who need to have such information for the purposes contemplated by this
Agreement. The receiving party will inform such persons of the obligations of
the receiving party hereunder and will require such persons to assume
obligations of confidence and restricted use consistent with those set forth
herein.
8.7.10.2 Each party's obligations of confidentiality
and restricted use shall not apply to information which: (a) is at the time of
the disclosure by the disclosing party in the public domain or becomes part of
the public domain by publication or otherwise through no fault of receiving
party and its employees, agents and representatives; (b) at the time of the
disclosure was in the possession of the receiving party as shown by receiving
party's written records and was obtained from a source other than the disclosing
party on a non-confidential basis by a third party entitled to disclose it to
the receiving party, provided that the receiving party uses its best efforts to
identify Confidential Information that may be offered by such third party and
inform the other party thereof; or (c) is permitted by the disclosing party to
be disclosed or used by the receiving party provided such permission is first
obtained in writing from an officer of the disclosing party. The receiving party
shall not be relieved of its obligations of confidentiality because Confidential
Information is embraced by more general information that falls within any one or
more of the foregoing exclusions, nor shall any combination of items of
Confidential Information be deemed to be within the exclusions merely because
individual items of information are within the exclusions.
8.7.11 APPROVAL OF PROJECT. Owner acknowledges that, other than
the obligations being assumed by Design-Builder under this Agreement,
Design-Builder shall not be authorized to
-25-
proceed with the Project or to enter into any other Contract Documents until
first obtaining the authorization of Lurgi AG.
8.7.12 CONFLICTS. In the event of any conflict between the
terms of this Agreement and any of the Exhibits, the terms of this Agreement
shall govern.
8.7.13 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and each fully-executed counterpart shall be deemed an
original. Facsimile signatures will be accepted for purposes of execution of
this Agreement.
-26-
In executing this Agreement, Owner and Design-Builder each represents that it
has the necessary financial resources to fulfill its obligations under this
Agreement, and each has the necessary corporate approvals to execute this
Agreement, and perform the services described herein. Design-Builder represents
that it has the skill and experience necessary to fulfill its obligations under
this Agreement and that the representations about the Design-Builder in
Design-Builder's response to the request for proposals remain true and accurate.
OWNER: DESIGN-BUILDER:
Illinois River Energy, LLC Lurgi PSI
---------------------------------- --------------------------------------
(NAME OF OWNER) (NAME OF DESIGN-BUILDER)
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------- --------------------------------------
(SIGNATURE) (SIGNATURE)
▇▇▇▇▇ ▇▇▇▇▇▇▇ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------- --------------------------------------
(PRINTED NAME) (PRINTED NAME)
President CEO
---------------------------------- --------------------------------------
(TITLE) (TITLE)
Date: July 1, 2002 Date: June 27, 2002
---------------------------- --------------------------------
LIST OF EXHIBITS:
Exhibit A - Form of Agreement (DBIA Form 525), as Modified
Exhibit B - General Conditions (DBIA Form 535), as Modified
Exhibit C - Project Responsibility Matrix
Exhibit D - Minimum Project Scope and Specifications
Exhibit E - Performance Standards and Guarantees
-27-
EXHIBIT A
FORM OF AGREEMENT (DBIA FORM 525, AS MODIFIED)
================================================================================
Design-Build Manual of Practice
Document Number 525
================================================================================
STANDARD FORM OF
AGREEMENT BETWEEN OWNER
AND DESIGN-BUILDER -
LUMP SUM
================================================================================
First Edition, October 1998
Design-Build Institute of America
Washington, D.C.
1
STANDARD FORM AGREEMENT BETWEEN
OWNER AND DESIGN-BUILDER - LUMP SUM
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. CONSULTATION WITH
AN ATTORNEY IS RECOMMENDED WITH RESPECT TO ITS COMPLETION OR MODIFICATION.
================================================================================
This AGREEMENT is made as of the _____ day of __________ in the year of ______,
by and between the following parties, for services in connection with the
Project identified below.
OWNER:
(NAME AND ADDRESS)
Illinois River Energy, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
DESIGN-BUILDER:
(NAME AND ADDRESS)
Lurgi PSI, Inc.
PROJECT:
(INCLUDE PROJECT NAME AND LOCATION
AS IT WILL APPEAR IN THE CONTRACT
DOCUMENTS)
Design and construction of a new 50 MMGPY dry mill fuel grade ethanol plant,
designed to expand to 100 MMGPY, to be located in ________________, Illinois.
In consideration of the mutual covenants and obligation contained herein, Owner
and Design-Builder agree as set forth herein.
2
ARTICLE 1
SCOPE OF WORK
1.1 Design-Builder shall perform all design and construction services,
and provide all material, equipment, tools and labor, necessary to complete the
Work described in and reasonably inferable from the Contract Documents.
ARTICLE 2
CONTRACT DOCUMENTS
2.1 The Contract Documents are comprised of the following:
.1 All written modifications, amendments and change orders to
this Agreement issued in accordance with DBIA Document No. 535, Standard
Form of General Conditions of Contract Between Owner and Design-Builder
(1998 Edition) ("General Conditions of Contract") as modified for this
Project;
.2 This Agreement, including all exhibits and
attachments, executed by Owner and Design-Builder;
.3 Written Supplementary Conditions, if any, to the
General Conditions of Contract;
.4 The General Conditions of Contract, DBIA Document No.
535, STANDARD FORM OF GENERAL CONDITIONS OF CONTRACT BETWEEN OWNER
AND DESIGN-BUILDER (1998 Edition) ("General Conditions of
Contract") as modified for this Project;
.5 DBIA Document No. 520 as signed by the Parties,
attached as Exhibit 3.;
.6 Construction Documents prepared and approved in
accordance with Section 2.4 of the General Conditions of Contract .
.7 The following other documents, if any: (IDENTIFY, FOR EXAMPLE,
UNIT PRICE SCHEDULES, DESIGN-BUILDER'S ALLOWANCES, PERFORMANCE STANDARD
REQUIREMENTS, OWNER'S PERMIT LIST AND ANY OTHER DOCUMENTS OWNER AND
DESIGN-BUILDER ELECT TO MAKE A CONTRACT DOCUMENT) .
3
ARTICLE 3
INTERPRETATION AND INTENT
3.1 The Contract Documents are intended to permit the parties to
complete the Work and all obligations required by the Contract Documents
within the Contract Time(s) for the Contract Price. The Contract Documents
are intended to be complementary and interpreted in harmony so as to avoid
conflict, with words and phrases interpreted consistent with construction and
design industry standards. In the event of any inconsistency, conflict, or
ambiguity between or among the Contract Documents, the Contract Documents
shall take precedence in the order in which they are listed in Section 2.1
hereof.
3.2 Terms, words and phrases used in the Contract Documents, including
this Agreement, shall have the meanings given them in the General Conditions of
Contract.
3.3 The Contract Documents form the entire agreement between Owner and
Design-Builder and by incorporation herein are as fully binding on the parties
as if repeated herein. No oral representations or other agreements have been
made by the parties except as specifically stated in the Contract Documents.
Nothing in this Agreement shall create a contractual relationship between the
Owner and any person or entity other than the Design-Builder.
ARTICLE 4
OWNERSHIP OF WORK PRODUCT
4.1 WORK PRODUCT. All designs, drawings, specifications, documents,
models, photographs (including negatives) electronic data and other work
products of the ____________________ Design-Builder, including those prepared
by the Design-Builder's consultants and Subcontractors are instruments of
service for this Project, whether or not the Project is completed, and are
the property of the Owner along with all copyrights therein. The
Design-Builder shall make all necessary arrangements in any contracts it has
with the Design-Builder's consultants and Subcontractors or others to provide
for such rights of the Owner. The Owner is entitled to possession of such
work products upon completion, termination of the Project, or Owner's
request, whichever occurs first. The ____________________ Design-Builder
shall _________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
be required to provide all such instruments of service, including
computer design electronic data to the Owner upon request. The Design-Builder
shall be entitled to retain copies of all of such work product and to reuse
individual details in subsequent work. Reuse by the Owner of any of such
instruments of service on extensions of this Project or on any other Project
4
without the written permission of the Design-Builder shall be at the Owner's
sole risk and without liability or legal expense to the Design-Builder.
ARTICLE 5
CONTRACT TIME
5.1 DATE OF COMMENCEMENT. The Work shall commence within five (5)
days of Design-Builder's receipt of Owner's Notice to Proceed ("Date of
Commencement") unless the parties mutually agree otherwise in writing.
5.2 SUBSTANTIAL COMPLETION AND FINAL COMPLETION
5.2.1 Substantial Completion of the entire Work shall be achieved no later
than sixteen (16) months after the Date of Commencement ("Scheduled Substantial
Completion Date").
5.2.2 Interim milestones and/or Substantial Completion of
identified portions of the Work shall be achieved as follows: INSERT ANY
INTERIM MILESTONES FOR PORTIONS OF THE WORK WITH DIFFERENT SCHEDULED
DATES FOR SUBSTANTIAL COMPLETION)
See Schedule contained in Exhibit 4.
5.2.3 Final Completion of the Work or identified portions of the Work
shall be achieved as expeditiously as reasonably practicable.
5.2.4 All of the dates set forth in this Article 5 ("Contract Time(s)")
shall be subject to adjustment in accordance with the General Conditions of
Contract.
5.3 TIME IS OF THE ESSENCE. Owner and Design-Builder mutually
agree that time is of the essence.
5.4 LIQUIDATED DAMAGES. Design-Builder understands that if
Substantial Completion or Interim Milestones and/or Substantial Completion of
identified portions of the Work are not attained by the Scheduled Substantial
Completion Date or applicable Interim Milestone Date, respectively), Owner
will suffer damages which are difficult to specify accurately and ascertain.
Design-Builder agrees that if Substantial Completion is not attained by the
Scheduled Substantial Completion Date (the "LD Date"), Designer-Builder shall
pay Owner _____________ Dollars ($____) as liquidated damages for each day
that Substantial Completion extends beyond the LD Date (the "Delay Liquidated
Damages"). The Delay Liquidated Damages provided herein shall be in lieu of
all liability for any and all extra costs, losses, expenses, claims,
penalties and any other damages, whether special or consequential, and of
whatsoever nature incurred by Owner which are occasioned by any delay in
achieving Substantial Completion. (IF LIQUIDATED DAMAGES ARE APPLICABLE TO
ANY DATES SET FORTH IN SECTION 5.2.2 HEREOF, THIS SECTION 5.4 WILL NEED TO BE
MODIFIED ACCORDINGLY)
5
5.4.1 Owner and Design-Builder agree that if the Project does not perform
as well as required by Owner Performance Requirements (set forth in Exhibit 2),
the Owner will suffer damages which are difficult to specify accurately and
ascertain. Design-Builder agrees that if performance tests (the "Performance
Tests") contained forth in Exhibit 3 do not produce results required by Exhibit
3, then Design-Builder shall pay Owner liquidated damages calculated as set
forth on Exhibit. 4 (the "Performance Liquidated Damages").
5.5 EARLY COMPLETION BONUS. If Substantial Completion is attained on
or before ______ days before the Scheduled Substantial Completion Date (the
"Bonus Date"), Owner shall pay Design-Builder at the time of Final Payment
under Section 7.3 hereof an early completion bonus of ________ Dollars
($____) for each day that Substantial Completion is attained earlier than the
Bonus Date. (IF AN EARLY COMPLETION BONUS IS APPLICABLE TO ANY DATES SET
FORTH IN SECTION 5.2.2 HEREOF, THIS SECTION 5.5 WILL NEED TO BE MODIFIED
ACCORDINGLY)
ARTICLE 6
CONTRACT PRICE
6.1 CONTRACT PRICE. Owner shall pay Design-Builder in accordance with
Article 6 of the General Conditions of Contract the sum of ____________
Dollars ($____) ("Contract Price"), subject to adjustments made in accordance
with the General Conditions of Contract. Unless otherwise provided in the
Contract Documents, the Contract Price is deemed to include all sales, use,
consumer and other taxes mandated by applicable Legal Requirements.
6.2 MARKUPS FOR CHANGES. If the Contract Price requires an
adjustment due to changes in the Work, and the cost of such changes is
determined under Sections 9.4.1.3 or 9.4.1.4 of the General Conditions of
Contract, the following markups shall be allowed on such changes: (INSERT
APPLICABLE MARKUPS)
ARTICLE 7
PROCEDURE FOR PAYMENT
7.1 PROGRESS PAYMENTS
7.1.1 Design-Builder shall submit to Owner on the _______ (____) day of
each month, beginning with the first month after the Date of Commencement,
Design-Builder's Application for Payment in accordance with Article 6 of the
General Conditions of Contract.
7.1.2 Owner shall make payment within ten (10) days after Owner's
receipt of each properly submitted and accurate Application for Payment in
accordance with Article 6 of the General Conditions of Contract, but in each
case less the total of payments previously made, and less amounts properly
withheld under Section 6.3 of the General Conditions of Contract.
6
7.2 RETAINAGE ON PROGRESS PAYMENTS
7.2.1 Owner will retain ten percent (10%)of each Application for Payment
provided. Owner will also reasonably consider reducing retainage for
Subcontractors completing their work early in the Project.
7.2.2 Upon Substantial Completion of the entire Work or, if applicable,
any portion of the Work, pursuant to Section 6.6 of the General Conditions of
Contract, Owner shall release to Design-Builder enough of retained amounts
relating, as applicable, to the entire Work or completed portion of the Work to
reduce retention to 5% for such Work plus an amount equal to 150% of the
reasonable value of all remaining or incomplete items of Work as noted in the
Certificate of Substantial Completion, AS DETERMINED BY OWNER.
7.3 FINAL PAYMENT. Design-Builder shall submit its Final Application
for Payment to Owner in accordance with Section 6.7 of the General Conditions
of Contract. Owner shall make payment on Design-Builder's properly submitted
and accurate Final Application for Payment within thirty (30) days after
Owner's receipt of the Final Application for Payment, provided that
Design-Builder has satisfied the requirements for final payment set forth in
Section 6.7.2 of the General Conditions of Contract.
7.4 INTEREST. Payments due and unpaid by Owner to Design-Builder,
whether progress payments or final payment, shall bear interest commencing
thirty (30)days after payment is due at the rate of prime plus 1%.
7.5 RECORD KEEPING AND FINANCE CONTROLS. With respect to changes in
the Work performed on a cost basis by Design-Builder pursuant to the Contract
Documents, Design-Builder shall keep full and detailed accounts and exercise
such controls as may be necessary for proper financial management, using
accounting and control systems in accordance with generally accepted
accounting principles and as may be provided in the Contract Documents.
During the performance of the Work and for a period of three (3) years after
Final Payment, Owner and Owner's accountants shall be afforded access from
time to time, upon reasonable notice, to Design-Builder's records, books,
correspondence, receipts, subcontracts, purchase orders, vouchers, memoranda
and other data to verify costs, payments to consultants, Subcontractors, and
suppliers, and compliance with the Contract Documents, all of which
Design-Builder shall preserve for a period of three (3) years after Final
Payment.
ARTICLE 8
TERMINATION FOR CONVENIENCE
8.1 Upon written notice to Design-Builder, Owner may, for its
convenience and without cause, elect to terminate this Agreement. In such
event, Owner shall pay Design-Builder for the following:
7
.1 all Work executed;
.2 the reasonable and documented costs and expenses attributable
to such termination, including demobilization costs and amounts due in
settlement of terminated contracts with Subcontractors and Design
Consultants; and
.3 ____________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
overhead and profit in the amount of ____ percent (____%) on the sum of
items .1 and .2 above.
8.2 In no event shall Owner be liable to Design-Builder for profit or
overhead on Work not executed.
8.3 A termination by Owner for cause which is determined to be
improper shall be deemed to be a termination under this Article 8.
(THE FOLLOWING ARTICLE 9 SHOULD ONLY BE USED IF THE OWNER AND
DESIGN-BUILDER AGREE TO ESTABLISH THEIR RESPECTIVE
REPRESENTATIVES AT THE TIME THE AGREEMENT IS EXECUTED RATHER
THAN DURING THE PERFORMANCE OF THE PROJECT)
ARTICLE 9
REPRESENTATIVES OF THE PARTIES
9.1 OWNER'S REPRESENTATIVES
9.1.1 Owner designates the individual listed below as its Senior
Representative ("Owner's Senior Representative"), which individual has the
authority and responsibility for avoiding and resolving disputes under Section
10.2.3 of the General Conditions of Contract: (IDENTIFY INDIVIDUAL'S NAME,
TITLE, ADDRESS AND TELEPHONE NUMBERS)
9.1.2 Owner designates the individual listed below as its Owner's
Representative, which individual has the authority and responsibility set forth
in Section 3.4 of the General Conditions of Contract: (IDENTIFY INDIVIDUAL'S
NAME, TITLE, ADDRESS AND TELEPHONE NUMBERS)
8
9.2 DESIGN-BUILDER'S REPRESENTATIVES
9.2.1 Design-Builder designates the individual listed below as its Senior
Representative ("Design-Builder's Senior Representative"), which individual has
the authority and responsibility for avoiding and resolving disputes under
Section 10.2.3 of the General Conditions of Contract: (IDENTIFY INDIVIDUAL'S
NAME, TITLE, ADDRESS AND TELEPHONE
NUMBERS)
9.2.2 Design-Builder designates the individual listed below as its
Design-Builder's Representative, which individual has the authority and
responsibility set forth in Section 2.1.1 of the General Conditions of Contract:
(IDENTIFY INDIVIDUAL'S NAME, TITLE, ADDRESS AND TELEPHONE NUMBERS)
ARTICLE 10
BONDS AND INSURANCE
10.1 INSURANCE. Design-Builder shall procure in accordance with
Article 5 of the General Conditions of Contract the following insurance
coverages: (ATTACH INSURANCE SCHEDULE INDICATING THE REQUIRED COVERAGE,
AMOUNT OF REQUIRED COVERAGE, DURATION OF COVERAGE, REQUIRED RATING OF
INSURANCE CARRIERS AND ANY OTHER INSURANCE REQUIREMENTS REQUIRED OF THE
PARTIES)
10.2 BONDS AND OTHER PERFORMANCE SECURITY. Design-Builder shall
provide the following performance bond and labor and material payment bond or
other performance security: (INSERT THE AMOUNT OF BONDS AND ANY OTHER
CONDITIONS OF THE BONDS OR OTHER SECURITY)
ARTICLE 11
OTHER PROVISIONS
11.1 Other provisions, if any, are as follows: (INSERT ANY
ADDITIONAL PROVISIONS)
11.0.2 Owner has the responsibilities listed in the Exhibit 6.
11.0.3 The following exhibits are incorporated into this
Agreement:
Exhibit 1 - Schedule
Exhibit 2 - Owner's Performance Requirements
Exhibit 3 - Performance Tests
Exhibit 4 - Performance Liquidated Damages
Exhibit 5 - DBIA Document No. 520
Exhibit 6 - Owner's Responsibilities
9
In executing this Agreement, Owner and Design-Builder each represents that it
has the necessary financial resources to fulfill its obligations under this
Agreement, and each has the necessary corporate approvals to execute this
Agreement, and perform the services described herein.
OWNER: DESIGN-BUILDER:
---------------------------------- --------------------------------------
(NAME OF OWNER) (NAME OF DESIGN-BUILDER)
---------------------------------- --------------------------------------
(SIGNATURE) (SIGNATURE)
---------------------------------- --------------------------------------
(PRINTED NAME) (PRINTED NAME)
---------------------------------- --------------------------------------
(TITLE) (TITLE)
Date: Date:
----------------------------- -------------------------------
10
EXHIBIT 1
SCHEDULE
NOTE: FAILURE TO ATTAIN INTERIM MILESTONES AND SUBSTANTIAL COMPLETION BY THE
APPLICABLE INTERIM MILESTONE DATES AND THE SCHEDULED SUBSTANTIAL COMPLETION DATE
WILL SUBJECT DESIGN-BUILDER TO DELAY DAMAGE PROVISIONS.
1
EXHIBIT 2
OWNER'S PERFORMANCE REQUIREMENTS
I. GENERAL PROJECT SCOPE CRITERIA
THE MINIMUM PROJECT SCOPE AND SPECIFICATIONS LISTED IN EXHIBIT D TO THE STANDARD
FORM OF PRELIMINARY AGREEMENT BETWEEN OWNER AND DESIGN-BUILDER TO WHICH THIS
EXHIBIT A IS ATTACHED ARE AND SHALL BE INCORPORATED INTO THIS PART I OF EXHIBIT
2 BY REFERENCE.
II. PROJECT PERFORMANCE GUARANTEE CRITERIA
THE MINIMUM PROJECT PERFORMANCE STANDARDS AND GUARANTEES LISTED IN EXHIBIT E TO
THE STANDARD FORM OF PRELIMINARY AGREEMENT BETWEEN OWNER AND DESIGN-BUILDER TO
WHICH THIS EXHIBIT A IS ATTACHED ARE AND SHALL BE INCORPORATED INTO THIS PART II
OF EXHIBIT 2 BY REFERENCE.
NOTE: PERFORMANCE GUARANTEE SHORTFALLS WILL SUBJECT DESIGN-BUILDER TO
PERFORMANCE DAMAGE PROVISIONS.
1
EXHIBIT 3
PERFORMANCE TESTS
TO BE DEVELOPED
1
EXHIBIT 4
PERFORMANCE LIQUIDATED DAMAGES
TO BE DEVELOPED
1
EXHIBIT 5
DBIA DOCUMENT NO. 520
AS SIGNED BY THE PARTIES
1
EXHIBIT 6
OWNER'S RESPONSIBILITIES
THE ITEMS SPECIFICALLY LISTED AS OWNER RESPONSIBILITY ON EXHIBIT C TO THE
STANDARD FORM OF PRELIMINARY AGREEMENT BETWEEN OWNER AND DESIGN-BUILDER TO WHICH
THIS EXHIBIT A IS ATTACHED ARE AND SHALL BE INCORPORATED INTO THIS PART I OF
EXHIBIT 2 BY REFERENCE.
NOTE: DESIGN-BUILDER IS RESPONSIBLE FOR ALL ITEMS NOT SPECIFICALLY LISTED
AS AN "OWNER RESPONSIBILITIES" ON EXHIBIT C, REGARDLESS OF WHETHER THE
ITEM IS LISTED OR NOT ON THE EXHIBIT C PROJECT RESPONSIBILITY MATRIX.
1
EXHIBIT B
FORM OF AGREEMENT (DBIA FORM 535, AS MODIFIED)
[DBIA DESIGN - BUILD INSTITUTE OF AMERICA LOGO]
STANDARD FORM OF GENERAL CONDITIONS
OF CONTRACT BETWEEN OWNER AND DESIGN-BUILDER
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES. CONSULTATION WITH
AN ATTORNEY IS RECOMMENDED WITH RESPECT TO ITS COMPLETION OR MODIFICATION.
================================================================================
TABLE OF CONTENTS
Article 1 General..............................................................2
Article 2 Design-Builder's Services and Responsibilities.......................3
Article 3 Owner's Services and Responsibilities................................7
Article 4 Hazardous Conditions and Differing Site Conditions...................8
Article 5 Insurance and Bonds..................................................9
Article 6 Payment.............................................................13
Article 7 Indemnification.....................................................16
Article 8 Time................................................................17
1
Article 9 Changes to the Contract Price and Time.............................17
Article 10 Contract Adjustments and Disputes..................................19
Article 11 Stop Work and Termination for Cause................................20
Article 12 Miscellaneous......................................................22
2
ARTICLE 1
GENERAL
1.1 MUTUAL OBLIGATIONS
1.1.1 Owner and Design-Builder commit at all times to cooperate fully
with each other, and proceed on the basis of trust and good faith, to permit
each party to realize the benefits afforded under the Contract Documents.
1.2 BASIC DEFINITIONS
1.2.1 AGREEMENT refers to the executed contract between Owner and
Design-Builder under DBIA Document No. 525, STANDARD FORM OF AGREEMENT BETWEEN
OWNER AND DESIGN-BUILDER / / / / LUMP SUM (1998 Edition) as revised by Owner,
as revised by Owner. Terms defined in the Agreement have the same definition
when used in these General Conditions unless defined differently in these
General Conditions.
1.2.2 DAY or DAYS shall mean calendar days unless otherwise
specifically noted in the Contract Documents.
1.2.3 DESIGN CONSULTANT is a qualified, licensed design professional
who is not an employee of Design-Builder, but is retained by Design-Builder, or
employed or retained by anyone under contract with Design-Builder or
Subcontractor, to furnish design services required under the Contract Documents.
1.2.4 HAZARDOUS CONDITIONS are any materials, wastes, substances and
chemicals deemed to be hazardous under applicable Legal Requirements, or the
handling, storage, remediation, or disposal of which are regulated by applicable
Legal Requirements.
1.2.5 General Conditions of Contract refer to this DBIA Document No.
535, Standard Form of General Conditions of Contract Between Owner and
Design-Builder (1998 Edition), as revised herein.
1.2.6 LEGAL REQUIREMENTS are all applicable federal, state and local
laws, codes, ordinances, rules, regulations, orders and decrees of any
government or quasi-government entity having jurisdiction over the Project or
Site, the practices involved in the Project or Site, or any Work.
1.2.7 OWNER'S PROJECT CRITERIA are developed by or for Owner to
describe Owner's program requirements and objectives for the Project, including
use, space, price, time, site and expandability requirements, as well as
submittal requirements and other requirements governing Design-Builder's
performance of the Work. Owner's Project Criteria may include conceptual
3
documents, design criteria, performance requirements and other Project-specific
technical materials and requirements.
1.2.8 SITE is the land or premises on which the Project is located.
1.2.9 SUBCONTRACTOR is any person or entity retained by Design-Builder
as an independent contractor to perform a portion of the Work and shall include
materialmen and suppliers.
1.2.10 SUB-SUBCONTRACTOR is any person or entity retained by a
Subcontractor as an independent contractor to perform any portion of a
Subcontractor's Work and shall include materialmen and suppliers.
1.2.11 SUBSTANTIAL COMPLETION is the date on which all of the following
have been accomplished: (1) the Work, or an agreed upon portion of the Work, is
sufficiently complete so that Owner can occupy and use the Project or, upon
approval of Owner, a portion thereof for its intended purposes; (2) the Work is
mechanically sound, designed, and constructed (all of which shall include
initial installation of equipment, sub-assemblies and parts), non-operating
adjustments, instrument calibrations, cold alignment checks, leak and pressure
tests, motors bumped for rotation, and electrical continuity checks have been
completed) and is ready for continuous operation and commissioning; (3)
Design-Builder has obtained the certificate of occupancy; and (4) the Project is
ready for start-up to produce ethanol (excluding those items in start-up which
are the Owner's responsibility)
1.2.12 WORK is comprised of all Design-Builder's design, construction
and other services required by the Contract Documents, including procuring and
furnishing all materials, equipment, services and labor reasonably inferable
from the Contract Documents.
1.3 OWNERSHIP AND USE OF DOCUMENTS
1.3.1 All designs, drawings, specifications, documents, models,
photographs (including negatives) electronic data and other work products of
Design-Builder, including those prepared by Design Consultants, Subcontractors,
and Sub-subcontractors, are instruments of service for this Project, whether or
not the Project is completed, and are the property of Owner along with all
copyrights therein. Design-Builder shall make all necessary arrangements in any
contracts it has with the Architect or others to provide for such rights of
Owner. Owner is entitled to possession of such work products upon completion,
termination of the Project, or Owner's request, whichever occurs first.
Design-Builder shall be required to provide all such instruments of service,
including computer design electronic data to Owner upon request. Design-Builder
shall be entitled to retain copies of all of such work product and to reuse
individual details in subsequent work.
4
ARTICLE 2
DESIGN-BUILDER'S SERVICES AND RESPONSIBILITIES
2.1 GENERAL SERVICES
2.1.1 Design-Builder's Representative shall be reasonably available to
Owner and shall have the necessary expertise and experience required to
supervise the Work. Design-Builder's Representative shall communicate regularly
with Owner and shall be vested with the authority to act on behalf of
Design-Builder. Design-Builder's Representative may be replaced only with the
agreement of Owner. Owner shall have the authority to approve or disapprove
members of Design-Builder's team (including all Design Consultants,
Subcontractors, and employees) on the Project, and Design-Builder shall not use
on this Project anyone disapproved of by Owner. Design-Builder shall provide
Owner with reasonable advance written notice of any Design Consultants and
Subcontractors Design-Builder proposes to use (and before using them or entering
into any binding agreement with them). If Design-Builder recommends to Owner the
use by Design-Builder of a specific Design Consultant or Subcontractor and that
Design Consultant or Subcontractor is fully qualified to perform the recommended
services and has submitted a proposal setting forth the proposed contract price
in a manner capable of accurate determination and comparison with proposals of
other Design Consultants or Subcontractors and in compliance with this
Agreement, but Owner requires Design-Builder to use a different Design
Consultant or Subcontractor, then Design-Builder may require that
Design-Builder's Contract Price be adjusted by the difference between the
proposal of the Design Consultant or Subcontractor recommended to Owner by
Design-Builder (for the same portion of Work as proposed to be performed by the
Design Consultant or Subcontractor recommended by the Design-Builder) and the
fee of the Design Consultant or Subcontractor approved by Owner with whom
Design-Builder actually enters into a contract.
2.1.2 Design-Builder shall provide Owner with a monthly status report
detailing the progress of the Work, including whether (i) the Work is proceeding
according to schedule, (ii) discrepancies, conflicts, or ambiguities exist in
the Contract Documents that require resolution, (iii) health and safety issues
exist in connection with the Work, and (iv) other items require resolution so as
not to jeopardize Design-Builder's ability to complete the Work for the Contract
Price and within the Contract Time(s).
2.1.3 Design-Builder shall prepare and submit, at least three (3)days
prior to the meeting contemplated by Section 2.1.4 hereof, a schedule for the
execution of the Work for Owner's review and response. The schedule shall
indicate the dates for the start and completion of the various stages of Work,
including the dates when Owner information and approvals are required to enable
Design-Builder to achieve the Contract Time(s). The schedule shall be revised as
required by conditions and progress of the Work, but such revisions shall not
relieve Design-Builder of its obligations to complete the Work within the
Contract Time(s), as such dates may be adjusted in accordance with the Contract
Documents. Owner's review of and response to the
5
schedule shall not be construed as relieving Design-Builder of its complete and
exclusive control over the means, methods, sequences and techniques for
executing the Work.
2.1.4 The parties will meet within seven (7)days after execution of
the Agreement to discuss issues affecting the administration of the Work and to
implement the necessary procedures, including those relating to submittals and
payment, to facilitate the ability of the parties to perform their obligations
under the Contract Documents.
2.1.5 Design-Builder agrees to cooperate at all times with Owner and
any lender or assignee of Owner and their respective agents and representatives
in performance of this Agreement. Design-Builder shall sign any document
reasonably required by Owner in order to satisfy all lenders or investors in
this Project.
2.1.6 Owner may assign its interests to a lender or investor or
purchaser of the Project at any time.
2.2 DESIGN PROFESSIONAL SERVICES
2.2.1 Design-Builder shall, consistent with applicable state licensing
laws, provide through qualified, licensed architects, engineers, and other
design professionals employed by Design-Builder, or procured from qualified,
independent licensed Design Consultants, the necessary design services,
including architectural, engineering and other design professional services, for
the preparation of the required drawings, specifications and other design
submittals to permit Design-Builder to complete the Work consistent with the
Contract Documents. Nothing in the Contract Documents is intended or deemed to
create any legal or contractual relationship between Owner and any Design
Consultant, except that Design-Builder shall provide in its contracts with
Design Consultants that Owner is an intended third party beneficiary of those
contracts with the right to enforce them.
2.3 STANDARD OF CARE FOR DESIGN PROFESSIONAL SERVICES
2.3.1 The standard of care for all design professional services
performed to execute the Work shall be the care and skill ordinarily used by
members of the design profession practicing under similar conditions at the same
time and locality of the Project. Notwithstanding the preceding sentence, if the
parties agree upon specific performance standards for any aspect of the Work,
which standards are as set forth in the Contract Documents, the design
professional services shall be performed to achieve such standards.
2.4 DESIGN DEVELOPMENT SERVICES
2.4.1 Design-Builder shall provide to Owner at Owner's request any
interim design submissions that Owner may wish to review, which interim design
submissions may include design criteria, drawings, diagrams and specifications
setting forth the Project requirements. On or about the time of the scheduled
submissions, Design-Builder and Owner shall meet and confer
6
about the submissions, with Design-Builder identifying during such meetings,
among other things, the evolution of the design and any significant changes or
deviations from the Contract Documents, or, if applicable, previously submitted
design submissions. Minutes of the meetings will be maintained by Design-Builder
and provided to all attendees for review. Following the design review meeting,
Owner shall review and approve the interim design submissions in a time that is
consistent with the turnaround times set forth in Design-Builder's schedule and
agreed to by Owner.
2.4.2 Design-Builder shall submit to Owner Construction Documents
setting forth in detail drawings and specifications describing the requirements
for construction of the Work. The Construction Documents shall meet the
requirements of the Contract Documents and be consistent with the latest set of
interim design submissions, as such submissions may have been modified in a
design review meeting. The parties shall have a design review meeting to
discuss, and Owner shall review and approve, the Construction Documents in
accordance with the procedures set forth Section 2.4.1 above. Design-Builder
shall proceed with construction in accordance with the approved Construction
Documents and shall submit one set of approved Construction Documents to Owner
prior to commencement of construction.
2.4.3 Owner's review and approval of interim design submissions and
the Construction Documents is for the purpose of mutually establishing a
conformed set of Contract Documents compatible with the requirements of the
Work. Neither Owner's review nor approval of any interim design submissions and
Construction Documents shall be deemed to transfer any design liability from
Design-Builder to Owner. Design-Builder shall not proceed with the construction
of the Project until authorized by Owner to do so in writing.
2.4.4 To the extent not prohibited by the Contract Documents or Legal
Requirements, Design-Builder may prepare interim design submissions and
Construction Documents for a portion of the Work to permit construction to
proceed on that portion of the Work prior to completion of the Construction
Documents for the entire Work.
2.5 LEGAL REQUIREMENTS
2.5.1 Design-Builder shall perform the Work in accordance with all
legal requirements and prudent industry practices and shall provide all notices
applicable to the Work as required by the Legal Requirements.
2.6 GOVERNMENT APPROVALS AND PERMITS
2.6.1 Except as identified in an Owner's Permit List attached as an
exhibit to the Agreement, Design-Builder shall obtain and pay for all necessary
permits, approvals, licenses,
7
government charges and inspection fees required for the prosecution of the Work
by any government or quasi-government entity having jurisdiction over the
Project.
2.6.2 Design-Builder shall provide reasonable assistance to Owner in
obtaining those permits, approvals and licenses that are Owner's responsibility.
2.7 DESIGN-BUILDER'S CONSTRUCTION PHASE SERVICES
2.7.1 Unless otherwise clearly provided in the Contract Documents to
be the responsibility of Owner or a separate contractor, Design-Builder shall
provide through itself or Subcontractors the necessary supervision, labor,
inspection, testing, start-up, material, equipment, machinery, temporary
utilities and other temporary facilities to permit Design-Builder to complete
construction of the Project consistent with the Contract Documents.
2.7.2 Design-Builder shall perform all construction activities
efficiently and with the requisite expertise, skill and competence to satisfy
the requirements of the Contract Documents. Design-Builder shall at all times
exercise complete and exclusive control over the means, methods, sequences and
techniques of construction.
2.7.3 Design-Builder shall employ only Subcontractors who are duly
licensed and qualified to perform the Work consistent with the Contract
Documents. Owner may object to Design-Builder's selection of any Subcontractor,
as provided in Section 2.1.1.
2.7.3.1 Design-Builder shall not use a subcontract agreement
unless it is first approved by Owner. Design-Builder shall furnish Owner
with copies of all subcontract agreements, including all documents
incorporated therein by reference, before any Subcontractor may begin
Work on the Project.
2.7.4 Design-Builder assumes responsibility to Owner for the proper
performance of the Work of Subcontractors and Design Consultants and any acts
and omissions in connection with such performance. Nothing in the Contract
Documents is intended or deemed to create any legal or contractual relationship
between Owner and Design Consultant, any Subcontractor or Sub-Subcontractor.
2.7.5 Design-Builder shall coordinate the activities of all
Subcontractors. If Owner performs other work on the Project or at the Site with
separate contractors under Owner's control, Design-Builder agrees to reasonably
cooperate and coordinate its activities with those of such separate contractors
so that the Project can be completed in an orderly and coordinated manner
without unreasonable disruption.
2.7.6 Design-Builder shall keep the Site reasonably free from debris,
trash and construction wastes to permit Design-Builder to perform its
construction services efficiently, safely and without interfering with the use
of adjacent land areas. Upon Substantial Completion of the Work, or a portion of
the Work, Design-Builder shall remove all debris, trash, construction
8
wastes, materials, equipment, machinery and tools arising from the Work or
applicable portions thereof to permit Owner to occupy the Project or a portion
of the Project for its intended use. The Design-Builder shall provide the
Project in clean condition.
2.8 DESIGN-BUILDER'S RESPONSIBILITY FOR PROJECT SAFETY
2.8.1 Design-Builder recognizes the importance of performing the Work
in a safe manner so as to prevent damage, injury or loss to (i) all individuals
at the Site, whether working or visiting, (ii) the Work, including materials and
equipment incorporated into the Work or stored on-Site or off-Site, and (iii)
all other property at the Site or adjacent thereto. Design-Builder assumes
responsibility for implementing and monitoring all safety precautions and
programs related to the performance of the Work. Design-Builder shall, prior to
commencing construction, designate a Safety Representative with the necessary
qualifications and experience to supervise the implementation and monitoring of
all safety precautions and programs related to the Work. Unless otherwise
required by the Contract Documents, Design-Builder's Safety Representative shall
be an individual stationed at the Site who may have responsibilities on the
Project in addition to safety. The Safety Representative shall make routine
daily inspections of the Site and shall hold weekly safety meetings with
Design-Builder's personnel, Subcontractors and others as applicable.
2.8.2 Design-Builder and Subcontractors shall comply with all Legal
Requirements relating to safety, as well as any Owner-specific safety
requirements set forth in the Contract Documents, provided that such
Owner-specific requirements do not violate any applicable Legal Requirement.
Design-Builder will immediately report in writing any safety-related injury,
loss, damage or accident arising from the Work to Owner's Representative and, to
the extent mandated by Legal Requirements, to all government or quasi-government
authorities having jurisdiction over safety-related matters involving the
Project or the Work.
2.8.3 Design-Builder's responsibility for safety under this
Section 2.8 is not intended in any way to relieve Subcontractors and
Sub-Subcontractors of their own contractual and legal obligations and
responsibility for (i) complying with all Legal Requirements, including those
related to health and safety matters, and (ii) taking all necessary measures to
implement and monitor all safety precautions and programs to guard against
injury, losses, damages or accidents resulting from their performance of the
Work.
2.9 DESIGN-BUILDER'S WARRANTY
2.9.1 Design-Builder warrants to Owner that the construction,
including all materials and equipment furnished as part of the construction,
shall be new unless otherwise specified in the Contract Documents, of good
quality, in conformance with the Contract Documents, fit for their intended
purpose, and free of defects in materials and workmanship. Design-Builder's
warranty obligation excludes defects caused by abuse, alterations, or failure to
maintain the Work by persons other than Design-Builder or anyone for whose acts
Design-Builder may be liable.
9
Nothing in this warranty is intended to limit any manufacturer's warranty which
provides Owner with greater warranty rights than set forth in this Section 2.9
or the Contract Documents. Design-Builder will provide Owner with all
manufacturers' warranties upon Substantial Completion.
2.10 CORRECTION OF DEFECTIVE WORK
2.10.1 Design-Builder agrees to correct any Work that is found not to
be in conformance with the Contract Documents, including that part of the Work
subject to Section 2.9 hereof, within a period of one year from the date of
Substantial Completion of the Work or any portion of the Work, or within such
longer period to the extent required by the Contract Documents.
2.10.2 Design-Builder shall, within two (2)days of receipt of written
notice from Owner that the Work is not in conformance with the Contract
Documents, take meaningful steps to commence correction of such nonconforming
Work, including the correction, removal or replacement of the nonconforming Work
and any damage caused to other parts of the Work affected by the nonconforming
Work. If Design-Builder fails to commence the necessary steps within such two
(2) day period or to complete the necessary steps as soon as possible, Owner, in
addition to any other remedies provided under the Contract Documents, may
provide Design-Builder with written notice that Owner will commence correction
of such nonconforming Work with its own forces. If Owner does perform such
corrective Work, Design-Builder shall be responsible for all reasonable costs
incurred by Owner in performing such correction. If the nonconforming Work
creates an emergency requiring an immediate response, the two (2)day periods
identified herein shall be deemed inapplicable and Design-Builder shall commence
correction immediately..
2.10.3 The one year period referenced in Section 2.10.1 above applies
only to Design-Builder's obligation to correct nonconforming Work and is not
intended to constitute a period of limitations for any other rights or remedies
Owner may have regarding Design-Builder's other obligations under the Contract
Documents.
2.10.4 Prior to Substantial Completion, and as a condition to its
approval by Owner, Design-Builder shall deliver the as-built drawings in redrawn
sepias and specifications with four (4) additional paper copies, arranged in
proper order, indexed, and certified as accurate to Owner. Prior to the
application for Final Payment, Design-Builder shall provide any updated as-built
drawings or specifications as may be required in the same manner and with the
same number of copies. No review or receipt of such records by Owner shall be
considered a waiver of any deviation from the Contract Documents nor in any way
relieve Design-Builder from its responsibility to perform the Work in accordance
with the Contract Documents.
2.10.5 Design-Builder shall be responsible for collecting, identifying
and collating the following materials, and shall deliver four (4) copies to
Owner at least sixty (60) days prior to the date Design-Builder is required to
achieve Substantial Completion: (1) complete equipment
10
diagrams, operating instructions, maintenance manuals, parts lists, tests and
balance reports, inspection reports, guarantees and warranties, as applicable,
for each piece of fixed equipment furnished under this Agreement, together with
specific information regarding manufacturer's name and address, nearest
distributor, service representative's name, address, office phone number, make
and model numbers, operating designs and characteristics, and the like. These
materials shall be supplied in a ring binder, hard-cover books, properly indexed
for easy reference (organized according to Construction Specifications Institute
Masterformat); (2) name and address of all Subcontractors and Sub-Subcontractors
(including equipment and material suppliers), together with their respective
areas of work, materials, or equipment furnished; (3) complete operating
instructions for each equipment system; (4) complete parts lists, together with
recommended spare parts for each type and model of equipment installed; (5)
complete list of all materials and equipment utilized, together with the
respective location in the Work.
2.10.6 Design-Builder shall perform the following as part of the
commissioning process: (a) provide a team of fifteen (15) workers selected by
Owner for up to forty-five days to make corrections, modifications, and
adjustments as needed in the commissioning process; and (b) cooperate with Owner
and provide information and technical support as requested by Owner.
ARTICLE 3
OWNER'S SERVICES AND RESPONSIBILITIES
3.1 DUTY TO COOPERATE
3.1.1 Owner shall, throughout the performance of the Work, cooperate
with Design-Builder and perform its responsibilities, obligations and services
in a timely manner to facilitate Design-Builder's timely and efficient
performance of the Work and so as not to delay or interfere with
Design-Builder's performance of its obligations under the Contract Documents.
3.1.2 Owner shall provide timely reviews and approvals of interim
design submissions and Construction Documents consistent with the turnaround
times set forth in Design-Builder's schedule approved by Owner.
3.2 FURNISHING OF SERVICES AND INFORMATION
3.2.1 Unless expressly stated to the contrary in the Contract
Documents, Owner shall provide, at its own cost and expense, for
Design-Builder's information and use the following:
.1 Surveys describing the property, boundaries,
topography and reference points for use during construction,
including existing service and utility lines;
.2 Geotechnical studies describing subsurface
conditions, and other surveys describing other latent or
concealed physical conditions at the Site;
11
.3 Temporary and permanent easements, zoning and
other requirements and encumbrances affecting land use, or
necessary to permit the proper design and construction of the
Project and enable Design-Builder to perform the Work;
.4 A legal description of the Site;
.5 To the extent available, as-built and record
drawings of any existing structures at the Site; and
.6 To the extent available, environmental
studies, reports and impact statements describing the
environmental conditions, including Hazardous Conditions, in
existence at the Site.
.7 All information provided to Design-Builder by
Owner under this Agreement shall remain the property of Owner
and shall not be released by Design-Builder to any third party
without the prior written consent of Owner, unless necessary to
complete the Work or such release of information is required by
the order of a court of competent jurisdiction.
3.2.2 Owner is responsible for securing and executing any agreements
with adjacent land or property owners that are necessary to meet Owner's
representation as to property rights and access which Owner has. Design-Builder
is responsible for securing and paying for any additional agreements, and
licenses, and property rights needed to enable Design-Builder to perform the
Work.
3.3 FINANCIAL INFORMATION
3.3.1 At Design-Builder's request, Owner shall promptly furnish
reasonable evidence satisfactory to Design-Builder that Owner has adequate funds
available and committed to fulfill all of Owner's contractual obligations under
the Contract Documents. If Owner fails to furnish such financial information in
a timely manner, Design-Builder may stop Work under Section 11.3 hereof or
exercise any other right permitted under the Contract Documents.
3.3.2 Design-Builder shall cooperate with the reasonable requirements
of Owner's lenders or other financial sources.
3.4 OWNER'S REPRESENTATIVE
3.4.1 Owner's Representative shall be responsible for providing
Owner-supplied information and approvals in a timely manner to permit
Design-Builder to fulfill its obligations under the Contract Documents. Owner's
Representative shall also provide Design-Builder with prompt notice if it
observes any failure on the part of Design-Builder to fulfill its contractual
obligations, including any errors, omissions or defects in the performance of
the Work.
12
3.5 GOVERNMENT APPROVALS AND PERMITS
3.5.1 Owner shall obtain and pay for all necessary permits, approvals,
licenses, government charges and inspection fees set forth in Owner's Permit
List attached as an exhibit to the Agreement.
3.5.2 Owner shall provide reasonable assistance to Design-Builder in
obtaining those permits, approvals and licenses that are Design-Builder's
responsibility.
3.6 OWNER'S SEPARATE CONTRACTORS
3.6.1 Owner is responsible for all work performed on the Project or at
the Site by separate contractor under Owner's control. Owner shall contractually
require its separate contractors to cooperate with, and coordinate their
activities so as not to interfere with, Design-Builder in order to enable
Design-Builder to timely complete the Work consistent with the Contract
Documents.
ARTICLE 4
HAZARDOUS CONDITIONS AND DIFFERING SITE CONDITIONS
4.1 HAZARDOUS CONDITIONS
4.1.1 Unless otherwise expressly provided in the Contract Documents to
be part of the Work, Design-Builder is not responsible for any Hazardous
Conditions encountered at the Site. Upon encountering any Hazardous Conditions,
Design-Builder will stop Work immediately in the affected area and duly notify
Owner and, if required by Legal Requirements, all government or quasi-government
entities with jurisdiction over the Project or Site.
4.1.2 Upon receiving notice of the presence of suspected Hazardous
Conditions, Owner shall take the necessary measures required to ensure that the
Hazardous Conditions are remediated or rendered harmless. Such necessary
measures shall include Owner retaining qualified independent experts to (i)
ascertain whether Hazardous Conditions have actually been encountered, and, if
they have been encountered, (ii) prescribe the remedial measures that Owner must
take either to remove the Hazardous Conditions or render the Hazardous
Conditions harmless.
4.1.3 Design-Builder shall be obligated to resume Work at the affected
area of the Project only after Owner's expert provides it with written
certification that (i) the Hazardous Conditions have been removed or rendered
harmless and (ii) all necessary approvals have been obtained from all government
and quasi-government entities having jurisdiction over the Project or Site.
4.1.4 Design-Builder will be entitled, in accordance with these
General Conditions of Contract, to an adjustment in its Contract Price and/or
Contract Time(s) to the extent Design-
13
Builder's cost and/or time of performance have been adversely impacted by the
presence of Hazardous Conditions. Design-Builder shall not be entitled to any
increase in the Contract Price or Contract Time(s) that Design-Builder would not
be entitled to recover for a Change Order.
4.1.5 To the fullest extent permitted by law, Owner shall indemnify,
defend and hold harmless Design-Builder, Design Consultants, Subcontractors,
anyone employed directly or indirectly for any of them, and their officers,
directors, employees and agents, from and against any and all claims, losses,
damages, liabilities and expenses, including attorneys' fees and expenses,
arising out of or resulting from the presence, removal or remediation of
Hazardous Conditions at the Site, except to the extent caused by
Design-Builder's negligence, breach of the Agreement, or intentional acts.
4.1.6 Notwithstanding the preceding provisions of this Section 4.1,
Owner is not responsible for Hazardous Conditions introduced to the Site by
Design-Builder, Subcontractors or anyone for whose acts they may be liable.
Design-Builder shall indemnify, defend and hold harmless Owner and Owner's
officers, directors, employees and agents from and against all claims, losses,
damages, liabilities and expenses, including attorneys' fees and expenses,
arising out of or resulting from those Hazardous Conditions introduced to the
Site by Design-Builder, Subcontractors or anyone for whose acts they may be
liable.
4.2 DIFFERING SITE CONDITIONS
4.2.1 Unknown concealed or latent physical conditions or subsurface
conditions at the Site that (i) materially differ from the conditions indicated
in the Contract Documents or (ii) are of an unusual nature, differing materially
from the conditions ordinarily encountered and generally recognized as inherent
in the Work are collectively referred to herein as "Differing Site Conditions."
If Design-Builder encounters a Differing Site Condition, Owner or Design-Builder
will be entitled to an adjustment in the Contract Price and/or Contract Time(s)
to the extent Design-Builder's cost and/or time of performance are impacted by
the Differing Site Condition but only for such cost and/or time that would be
included in a Change Order. Design-Builder shall carefully document any such
costs incurred and time lost and shall recover only for properly documented cost
and time.
4.2.2 Upon encountering a Differing Site Condition, Design-Builder
shall provide prompt written notice to Owner of such condition, which notice
shall not be later than fourteen (14)days after such condition has been
encountered. Design-Builder shall, to the extent reasonably possible, provide
such notice before the Differing Site Condition has been substantially disturbed
or altered.
14
ARTICLE 5
INSURANCE AND BONDS
5.1 DESIGN-BUILDER'S INSURANCE REQUIREMENTS
5.1.1 Design-Builder at its sole cost and expense is responsible for
procuring and maintaining from insurance companies authorized to do business in
the state in which the Project is located, and with a minimum rating set forth
in the Agreement, the following insurance coverages for certain claims which may
arise from or out of the performance of the Work and obligations under the
Contract Documents:
.1 Coverage for claims arising under workers'
compensation, disability and other similar employee benefit laws
applicable to the Work;
.2 Coverage for claims by Design-Builder's
employees for bodily injury, sickness, disease, or death;
.3 Coverage for claims by any person other than
Design-Builder's employees for bodily injury, sickness, disease,
or death;
.4 Coverage for usual personal injury liability
claims for damages sustained by a person as a direct or indirect
result of Design-Builder's employment of the person, or
sustained by any other person;
.5 Coverage for claims for damages (other than
to the Work) because of injury to or destruction of tangible
property, including loss of use;
.6 Coverage for claims of damages because of
personal injury or death, or property damage resulting from
ownership, use and maintenance of any motor vehicle; and
.7 Coverage for contractual liability claims
arising out of Design-Builder's obligations under
Section 7.4.1 hereof.
.8 Claims for errors or omissions relating to the
design or design professional services.
5.1.2 Design-Builder's liability insurance required by Section 5.1.1
above shall be written for the coverage amounts set forth in the Agreement and
shall include completed operations insurance for the period of time set forth in
the Agreement. Design-Builder shall provide its insurance from insurance
companies with (i) a Best Insurance Reports rating of "A" or better and a
financial size category of "IX" or higher, or (ii) if not rated by Best, a
Standard &
15
Poor financial strength rating of "A" or higher, or (iii) other companies
approved by Owner in writing signed by Owner and acknowledging that such
insurance companies do not have the foregoing ratings.
5.1.3 Design-Builder's liability insurance set forth in Sections
5.1.1.1 through 5.1.1.6 above shall specifically delete any design-build or
similar exclusions that could compromise coverages because of the design-build
delivery of the Project.
5.1.4 Any professional liability insurance shall specifically delete
any design-build or similar exclusions that could compromise coverages because
of the design-build delivery of the Project. Such policies shall be provided to
Owner prior to the commencement of any design services hereunder.
5.1.5 Prior to commencing any Work hereunder, Design-Builder shall
provide Owner with certificates evidencing that (i) all insurance obligations
required by the Contract Documents are in full force and in effect and will
remain in effect for the duration required by the Contract Documents and (ii) no
insurance coverage will be canceled, allowed to expire, renewal refused, or
materially changed unless at least thirty (30)days prior written notice is given
to Owner.
5.1.6 The insurance required by the Agreement shall be written for not
less than limits of liability specified in the Agreement or required by law,
whichever coverage is greater. Coverages, whether written on an occurrence or
claims-made basis, shall be maintained without interruption from date of
commencement of the Work until date of final payment and termination of any
coverage required to be maintained after final payment. Coverage shall be on an
"occurrence" basis, not an "accident" basis (except professional liability
insurance coverage may be on a "claims made" basis if that insurance is not
reasonably available on an "occurrence" basis). The insurance specified shall be
considered as minimum requirements. Design-Builder is responsible for providing
any additional insurance it deems necessary to protect its interest from other
hazards or claims in excess of the minimum coverage. Design-Builder's minimum
limits of liability are as follows:
Workers' Compensation - State Statutory (Policy to include a waiver of
subrogation in favor of Owner) Employer's Liability - Bodily injury by
accident - $1,000,000 each accident; bodily injury by disease -
$1,000,000 contract limit; bodily injury by disease - $1,000,000 each
employee.
Commercial General Liability - (including, without limitation, Premises
Operations; Independent Contractors (let or sublet work); Contractual
Liability; Products and Completed Operations; Explosion, Collapse and
Underground ("XCU"); Broad Form Property Personal Injury and Advertising
Liability (employment exclusion deleted); Incidental Medical
Malpractice; Amendment of Pollution Exclusion-hostile fire;
Cross-liability and severability of interests) Minimum Coverage
$1,000,000 Combined Single Limit ("C.S.L.")
Commercial Auto Coverage - $1,000,000 C.S.L. (This policy shall cover
all Design-Builder furnished, owned, hired, and non-owned vehicles,
including the loading or unloading thereof.) Umbrella Excess Liability -
(following form on Employer's Liability, Commercial General Liability
and Automobile Coverages). Minimum Coverage - $20,000,000 Minimum Limit
of liability coverage.
16
Professional Liability Insurance with a minimum single limit of
$5,000,000 per claim insuring Design-Builder and all other persons for
whose acts Design-Builder may be liable against any and all liabilities
arising out of or relating to the negligent acts, errors, or omissions
in connection with the carrying out of professional responsibilities
relating to this Agreement. If the performance of the Work requires the
use of any aircraft that is owned, leased, or chartered by
Design-Builder or its Subcontractors or Sub-subcontractors, aircraft
liability insurance with a $25,000,000 minimum limit per occurrence for
property damage and bodily injury, including passengers and crew.
The Design-Builder shall or shall cause all applicable Subcontractors to
obtain Ocean Marine insurance covering shipments of equipment and
materials, and shall provide evidence of such insurance to Owner prior
to the shipment of any such equipment or materials. If Design-Builder or
any of Design-Builder's Subcontractors intends to ship any equipment or
materials by ocean marine, Design-Builder shall notify Owner thirty (30)
days prior to shipping. At such time, Owner shall have the right and
option to purchase Ocean Marine Insurance Coverage for such equipment
and/or materials. In the event Owner exercises such right and option,
Design-Builder or the applicable Subcontractor shall be relieved from
its obligation to purchase the insurance coverage specified in the first
sentence of this Section. Further, the Contract Price shall thereupon be
reduced to reflect the savings realized by Design-Builder or by the
applicable insurer or Subcontractor as a result of the cost savings
which accrued to the Subcontractor by reason of release from the
obligation to purchase ocean marine insurance coverage. Design-Builder
shall exercise its best efforts in obtaining the best possible cost
savings from such Subcontractors in the event Owner exercises the
preceding right and option.
5.1.7 Design-Builder shall include Owner and its lenders as additional
insureds under Design-Builder's insurance except Worker's Compensation and
Professional Liability Insurance by using ISO form 2010 (1986). With respect to
all insureds, including all additional insureds, Design-Builder's insurance
shall be primary and non-contributing with respect to any insurance carried by
or otherwise available to Owner or its lenders. Design-Builder's insurance shall
provide that for all insureds, including all additional Insureds,
cross-liability and severability of interests shall exist for all coverages
provided thereunder. Design-Builder's insurance policies must all provide a
waiver of subrogation endorsement in favor of Owner and its lenders.
5.1.8 Approval of the insurance by Owner shall not relieve or decrease
the liability of Design-Builder. Owner does not in any way represent that the
insurance or the limits of insurance specified in these articles are sufficient
or adequate to protect Design-Builder's interests or liabilities, but are
minimums.
5.1.9 Design-Builder's Contractual Liability Insurance shall cover the
Design-Builder's obligations under this Agreement.
5.1.10 In the event Design-Builder fails to procure or maintain any
insurance coverage required under this Agreement, Owner may purchase such
coverage and deduct the cost thereof from the Contract Price.
5.1.11 Compliance by Design-Builder with the insurance requirements
herein shall not relieve it from liability for amounts in excess of the limits
of insurance.
17
5.1.12 Where special or unusual hazards peculiar to the Project are
foreseeable, Design-Builder shall take such steps as are necessary to insure
against the hazards and be responsible for any damage, including water, which
results from the occurrence of the hazards in connection with the Project.
5.1.13 If any government agency or body requires special coverage for
Work on or adjacent to public streets or property, Design-Builder shall comply
with and provide such insurance, endorsements, or extensions as may be required.
5.1.14 Design-Builder shall require all Design Consultants, to purchase
and maintain insurance satisfactory to Owner and to provide Owner with such
evidence of that coverage as Owner may require, including certificates of
insurance. At a minimum, the Design Consultants shall carry, and shall require
each of their consultants to carry, the following insurance: (a) Worker's
compensation insurance covering all persons employed or retained by them or
their consultants in connection with the Project with statutory coverage limits;
(b) Professional liability insurance for the Project written on a claims made
basis with limits of liability in amounts not less than two million dollars
($2,000,000.00) per claim and not less than two million dollars ($2,000,000.00)
aggregate insuring against any and all liabilities arising out of or in
connection with the negligent acts, errors, or omissions of any of the foregoing
in connection with the carrying out of their professional responsibilities for
the Project; (c) Commercial general liability insurance written on an
"occurrence basis" with coverage of not less than two million dollars
($2,000,000.00) for any single occurrence and of not less than two million
dollars ($2,000,000.00) aggregate; (d) Valuable papers insurance written on an
all risks basis insuring for the benefit of Design-Builder and Owner all plans,
designs, drawings, specifications, and documents produced or used under this
Agreement by Design-Builder or any of its consultants in a total amount of not
less than one hundred thousand dollars ($100,000.00).
5.1.15 Design-Builder shall maintain all required insurance with
responsible insurance carriers licensed and admitted to do business in the state
where the Project is located.
5.1.16 Design-Builder shall not allow insurance required by this
Agreement to lapse, be canceled, non-renewed, or changed until the Work is
completed or such later date as may be required by this Agreement.
Design-Builder shall deliver to Owner a Certificate of Insurance, or if required
by Owner, certified copies of all insurance policies relating to design
professionals. The Certificate must be submitted on the standard ▇▇▇▇▇ form and
must include confirmation that all of the required coverages are provided,
including additional insureds. Coverages included and excluded from commercial
general liability policies must be stated. In the event of cancellation, change,
non-renewal, or expiration, thirty (30) days written notice shall be given to
Owner and Design-Builder by the insurance company or companies. Each policy of
insurance and Certificate of Insurance shall contain the clause "In the event of
cancellation, change, non-renewal, or expiration of the policy or of any change
in the policy of any nature, thirty (30) days advance written notice will be
sent to Owner and Design-Builder" and shall be validated by an authorized
representative of the insurer.
18
5.1.17 Insurance policies required by this Agreement shall be kept in
full force and effect for the following periods: (a) Commercial general
liability insurance shall be kept in full force and effect until receipt of
final payment by Design-Builder; (b) Valuable papers insurance shall be kept in
full force and effect until final delivery of all documents to which reference
is made in the Contract Documents; (c) Worker's compensation insurance shall be
kept in force until receipt of final payment by Design-Builder hereunder; and
(d) Professional liability insurance shall be kept in force for six years after
final completion of the Project.
5.1.18 If Design-Builder should fail to effect and keep in force the
insurance for which it is responsible, Owner may effect and keep in force any
such insurance, and pay such premiums as may be necessary for that purpose, and
from time to time deduct the amount so paid by Owner from any amounts due or
which may become due under this Agreement, or submit a written invoice for
reimbursement by Design-Builder, which shall be paid by Design-Builder within
thirty (30) days.
5.2 OWNER'S LIABILITY INSURANCE
5.2.1 Owner shall procure and maintain from insurance companies
authorized to do business in the state in which the Project is located such
liability insurance to protect Owner from claims which may arise from the
performance of Owner's obligations under the Contract Documents or Owner's
conduct during the course of the Project.
5.3 OWNER'S PROPERTY INSURANCE
5.3.1 Unless otherwise provided in the Contract Documents, Owner shall
procure and maintain from insurance companies authorized to do business in the
state in which the Project is located property insurance upon the entire Project
to the full insurable value of the Project, including professional fees,
overtime premiums and all other expenses incurred to replace or repair the
insured property. The property insurance obtained by Owner shall protect the
interests of Owner, Design-Builder, Design Consultants performing Work at the
Site, Subcontractors and Sub-Subcontractors, and shall insure against the perils
of fire and extended coverage, theft, vandalism, malicious mischief, collapse,
flood, earthquake, debris removal and other perils or causes of loss as called
for in the Contract Documents. The coverage of the property insurance provided
by Owner will not include physical loss or damage to machinery, tools or
equipment owned, rented, leased, or used by Design-Builder or its
Subcontractors, Sub-subcontractors, or their employees or agents or Work away
from the Site, including materials and equipment in transit and Design-Builder
is responsible for providing insurance for such property.
5.3.2 Unless the Contract Documents provide otherwise, Owner shall
procure and maintain boiler and machinery insurance that will include the
interests of Owner, Design-Builder, Design Consultants, Subcontractors and Sub-
subcontractors.
19
5.3.3 Prior to Design-Builder commencing any Work, Owner shall provide
Design-Builder with certificates evidencing that (i) all Owner's insurance
obligations required by Section 5.3.1 are in full force and in effect and will
remain in effect until Design-Builder has completed all of the Work and has
received final payment from Owner and (ii) no insurance coverage will be
canceled, renewal refused, or materially changed unless at least thirty (30)
days prior written notice is given to Design-Builder. Owner's property insurance
shall not lapse or be canceled if Owner occupies a portion of the Work pursuant
to Section 6.6.3 hereof. Owner shall provide Design-Builder with the necessary
endorsements from the insurance company prior to occupying a portion of the
Work.
5.3.4 Any loss covered under Owner's property insurance shall be
adjusted with Owner and made payable to Owner as trustee for the insureds as
their interests may appear, subject to any applicable mortgage clause. All
insurance proceeds received as a result of any loss will be placed in a separate
account and distributed in accordance with such agreement as the interested
parties may reach. Any disagreement concerning the distribution of any proceeds
will be resolved in accordance with Article 10 hereof.
5.3.5 Owner and Design-Builder waive against each other and Owner's
separate contractors, Design Consultants, Subcontractors, agents and employees
of each and all of them, all damages covered by property insurance provided
herein, except such rights as they may have to the proceeds of such insurance.
Design-Builder and Owner shall, where appropriate, require similar waivers of
subrogation from Owner's separate contractors, Design Consultants and
Subcontractors and shall require each of them to include similar waivers in
their contracts.
5.4 BONDS AND OTHER PERFORMANCE SECURITY
PERFORMANCE BOND AND PAYMENT BOND
5.4.1 At its sole cost and expense, Design-Builder shall furnish a
Performance Bond and Labor and Material Payment Bond in form and substance
satisfactory to Owner in its sole judgment and without limitation, complying
with the following specific requirements:
5.4.1.1 Bond shall be executed by a surety, licensed in the
State of Illinois, with a rating of no less than A/XII in the BEST'S
INSURANCE GUIDE, and shall remain in effect for a period of not less
than two (2) years following the date of Substantial Completion or the
time required to resolve any items of incomplete Work and the payment of
any disputed amounts, whichever time period is longer.
5.4.1.2 The Performance Bond and the Labor and Material Payment
Bond shall each be in amount equal to the Contract Sum and all
subsequent increases.
5.4.1.3 Design-Builder shall require the attorney in fact who
executes the required bonds on behalf of the Surety to affix thereto a
certified and current copy of his power of attorney indicating the
monetary limit of such power.
20
5.4.1.4 Every Bond must display the surety's bond number. A
rider including the following provisions shall be attached to each bond:
(i) The Surety hereby agrees that it
consents to and waives notice of any addition,
alteration, omission, change, or other modifications of
the Contract Documents. Any addition, alteration,
change, extension of time, or other modification of the
Contract Documents, or a forbearance on the part of
either Owner or Design-Builder to the other, shall not
release the Surety of its obligations hereunder, and
notice to the Surety of such matters is hereby waived;
and
(ii) The Surety agrees that it is obligated
under the bonds to any successor, grantee, or assignee
of Owner.
5.4.2 Upon the request of any person or entity appearing to be a
potential beneficiary of bonds covering payment of obligations arising under the
Agreement, Design-Builder shall promptly furnish a copy of the bonds or shall
permit a copy to be made.
5.4.3 Design-Builder shall keep the surety informed of the progress of
the Work and, where necessary, obtain the surety's consent to, or waiver of, (i)
notice of changes in the Work; (ii) request for reduction or release of
retention; (iii) request for final payment; and (iv) any other item required by
the surety. Owner shall be notified by Design-Builder, in writing, of all
communications with the surety. Owner may, in Owner's sole discretion, inform
the surety of the progress of the Work and obtain consents as necessary to
protect Owner's rights, interests, privileges, and benefits under and pursuant
to any bond issued in connection with the Work.
ARTICLE 6
PAYMENT
6.1 SCHEDULE OF VALUES
6.1.1 Within ten (10)days of execution of the Agreement,
Design-Builder shall submit for Owner's review and approval a schedule of values
for all of the Work supported by such information to substantiate its accuracy
as Owner may require. The Schedule of Values will (i) subdivide the Work into
its respective parts and be in such form and detail as Owner may require, (ii)
include values for all items comprising the Work and (iii) serve as the basis
for monthly progress payments made to Design-Builder throughout the Work. The
schedule of values shall be balanced and shall not be front-end loaded.
6.2 MONTHLY PROGRESS PAYMENTS
6.2.1 On or before the date established in the Agreement,
Design-Builder shall submit for Owner's review and approval its Application for
Payment requesting payment for all Work performed as of the date of the
Application for Payment. The Application for Payment shall be
21
accompanied by all supporting documentation required by the Contract Documents
and/or established at the meeting required by Section 2.1.4 hereof. The
Application for Payment shall include such other documentation as may be
required by Owner's lenders.
6.2.2 The Application for Payment may request payment for equipment
and materials not yet incorporated into the Project, provided that (i) Owner is
satisfied that the equipment and materials are suitably stored at either the
Site (or another acceptable location if approved in writing in advance by
Owner), (ii) the equipment and materials are protected by suitable insurance and
(iii) upon payment, Owner will receive the equipment and materials free and
clear of all liens and encumbrances.
6.2.3 The Application for Payment shall constitute Design-Builder's
representation that the Work has been performed consistent with the Contract
Documents, has progressed to the point indicated in the Application for Payment,
and that title to all Work will pass to Owner free and clear of all claims,
liens, encumbrances, and security interests upon the incorporation of the Work
into the Project, or upon Design-Builder's receipt of payment, whichever occurs
earlier.
6.2.4 If required by Owner, the Application for Payment shall be sworn
to as accurate and notarized and supported by such data substantiating
Design-Builder's right to payment as Owner may require, such as copies of
requisitions from Subcontractor, and reflecting retainage. Applications for
Payment shall be submitted on AIA Documents G702 and G703 or other forms
approved by Owner. On each Application for Payment, Design-Builder shall certify
that Design-Builder has paid all bills and Subcontractors and Design Consultants
for all Work for which payment has been made to Design-Builder by Owner; and if
partial payment has been made by Design-Builder, then Design-Builder shall
identify payments made to Subcontractors and Design Consultants. Each
Application for Payment shall include a sworn statement by Design-Builder duly
signed and notarized listing all Subcontractors and Design Consultants and their
respective scopes of Work, contract prices, and payments made to them to the
date of the end of the time period covered by the Application for Payment. If
requested by Owner, Design-Builder shall provide lien waivers for itself for the
current Application for Payment and for Subcontractors, Sub-subcontractors, and
Design Consultants for the previous Application for Payments before
Design-Builder has earned or has the right to receive any payment. All lien
waivers shall be provided in the form required by Owner. With the Final
Application for Payment, Design-Builder shall furnish final lien waivers to
Owner for all Work furnished by Design-Builder, Subcontractors,
Sub-subcontractors, Design Consultants, and other persons furnishing labor or
materials for the Work, as a precondition to Final Payment. This Section shall
not limit other obligations of Design-Builder contained elsewhere to provide
lien waivers.
6.2.5 Application for Payment shall not include requests for payment
for portions of the Work for which Design-Builder does not intend to pay a
Design Consultant or Subcontractor within thirty (30) days, unless such Work has
been performed by others whom Design-Builder intends to pay within thirty (30)
days.
22
6.3 WITHHOLDING OF PAYMENTS
6.3.1 Provided Design-Builder has properly submitted the Application
for Payment with all required documentation, on or before the date established
in the Agreement, Owner shall pay Design-Builder all amounts properly due. Owner
may withhold payment in whole or in part to the extent reasonably necessary to
protect Owner. If Owner determines that Design-Builder is not entitled to all or
part of an Application for Payment, it will notify Design-Builder in writing at
least five (5)days prior to the date payment is due. The notice shall indicate
the specific amounts Owner intends to withhold, the reasons and contractual
basis for the withholding, and the specific measures Design-Builder must take to
rectify Owner's concerns. Design-Builder and Owner will attempt to resolve
Owner's concerns prior to the date payment is due. If the parties cannot resolve
such concerns, Design-Builder may pursue its rights under the Contract
Documents, including those under Article 10 hereof.
6.3.2 Provided Design-Builder has properly submitted the Application
for Payment with required documentation and subject to Owner's rights to
withhold, Owner shall pay Design-Builder all undisputed amounts in an
Application for Payment within the times required by the Agreement.
6.3.3 The Payment, Certificate of Substantial Completion, partial or
entire use or occupancy of the Project by Owner, shall not constitute acceptance
of Work not in accordance with the Contract Documents or a waiver of any of
Owner's rights or remedies.
6.4 RIGHT TO STOP WORK AND INTEREST
6.4.1 If Owner fails to pay Design-Builder any amount that becomes
due, Design-Builder, in addition to all other remedies provided in the Contract
Documents, may stop Work pursuant to Section 11.3 hereof. All payments due and
unpaid shall bear interest at the rate set forth in the Agreement.
6.5 DESIGN-BUILDER'S PAYMENT OBLIGATIONS
6.5.1 Design-Builder shall pay Design Consultants and Subcontractors,
in accordance with its contractual obligations to such parties, all the amounts
Design-Builder has received from Owner on account of their work. Design-Builder
will impose similar requirements on Design Consultants and Subcontractors to pay
those parties with whom they have contracted. Design-Builder will indemnify and
defend Owner against any claims for payment and mechanic's liens as set forth in
Section 7.3 hereof.
6.6 SUBSTANTIAL COMPLETION
6.6.1 Design-Builder shall notify Owner when it believes the Work, or
to the extent permitted in the Contract Documents, a portion of the Work, is
substantially complete and, with or before such notice, shall provide Owner a
draft list of items of Work that have to be
23
completed before final payment. Owner may add items to this list. Within five
(5)days of Owner's receipt of Design-Builder's notice, Owner and Design-Builder
will jointly inspect such Work to verify that it is substantially complete in
accordance with the requirements of the Contract Documents. If such Work is
substantially complete, Owner shall prepare and issue a Certificate of
Substantial Completion that will set forth (i) the date of Substantial
Completion of the Work or portion thereof, (ii) the remaining items of Work that
have to be completed before final payment(omissions of an item from the list
shall not be a waiver of the right to have such items of Work done or an
admission that it was done), (iii) provisions (to the extent not already
provided in the Contract Documents) establishing Owner's and Design-Builder's
responsibility for the Project's security, maintenance, utilities and insurance
pending final payment and (iv) an acknowledgment that warranties commence to run
on the date of Substantial Completion, except as may otherwise be noted in the
Certificate of Substantial Completion.
6.6.2 Upon Substantial Completion of the entire Work or, if
applicable, any portion of the Work, Owner shall release to Design-Builder all
retained amounts relating, as applicable, to the entire Work or completed
portion of the Work, less an amount equal to 150% of the reasonable value of all
remaining or incomplete items of Work as noted in the Certificate of Substantial
Completion or as later identified plus such other amounts as may be reasonably
necessary to protect Owner.
6.6.3 Owner, at its option, may use a portion of the Work which has
been determined to be substantially complete, provided, however, that (i) a
Certificate of Substantial Completion has been issued for the portion of Work
addressing the items set forth in Section 6.6.1 above, (ii) Design-Builder and
Owner have obtained the consent of their sureties and insurers, and to the
extent applicable, the appropriate government authorities having jurisdiction
over the Project, and (iii) Owner's use or occupancy will not significantly
interfere with Design-Builder's completion of the remaining Work.
6.7 FINAL PAYMENT
6.7.1 After receipt of a proper Final Application for Payment from
Design-Builder including all required documentation and submissions, Owner shall
make final payment by the time required in the Agreement, provided that
Design-Builder has completed all of the Work in conformance with the Contract
Documents.
6.7.2 At the time of submission of its Final Application for Payment,
Design-Builder shall provide the following information:
.1 all required lien waivers and an affidavit
that there are no claims, obligations or liens outstanding or
unsatisfied for labor, services, material, equipment, taxes or
other items performed, furnished or incurred for or in
connection with the Work which will in any way affect Owner's
interests;
24
.2 a general release executed by Design-Builder
waiving, upon receipt of final payment by Design-Builder, all
claims, except those claims previously made in writing to Owner
and remaining unsettled at the time of final payment;
.3 consent of Design-Builder's surety, if any,
to final payment;
.4 all operating manuals, warranties and other
deliverables required by the Contract Documents; and
.5 certificates of insurance confirming that
required coverages will remain in effect consistent with the
requirements of the Contract Documents.
ARTICLE 7
INDEMNIFICATION
7.1 PATENT AND COPYRIGHT INFRINGEMENT
7.1.1 Design-Builder shall pay all royalties and license fees, assign
such rights to Owner and provide Owner copies of such licenses and assignments
at Owner's request and in a form reasonably satisfactory to Owner.
Design-Builder shall defend with attorneys acceptable to Owner any action or
proceeding brought against Owner based on any claim that the Work, or any part
thereof, or the operation or use of the Work or any part thereof, constitutes
infringement or improper use of any United States patent or copyright, now or
hereafter issued, or other proprietary right. Owner shall give prompt written
notice to Design-Builder of any such action or proceeding and will reasonably
provide authority, information and assistance in the defense of same.
Design-Builder shall indemnify and hold harmless Owner from and against all
damages and costs, including but not limited to multiple damages, punitive or
exemplary damages, attorneys' fees and expenses awarded against Owner or
Design-Builder in any such action or proceeding. Design-Builder agrees to keep
Owner informed of all developments in the defense of such actions or proceedings
and to allow Owner to attend and observe any such actions or proceedings.
7.1.2 If Owner is enjoined from the operation or use of the Work, or
any part thereof, as the result of any patent or copyright suit, claim, or
proceeding, Design-Builder shall at its sole expense take reasonable steps to
procure the right to operate or use the Work. If Design-Builder cannot so
procure such right within a reasonable time, Design-Builder shall promptly, at
Design-Builder's option and at Design-Builder's expense, (i) modify the Work so
as to avoid infringement of any such patent or copyright or (ii) replace said
Work with Work that does not infringe or violate any such patent or copyright.
25
7.1.3 Sections 7.1.1 and 7.1.2 above shall not be applicable to any
suit, claim or proceeding based on infringement or violation of a patent or
copyright (i) relating solely to a particular process or product of a particular
manufacturer specified by Owner and not offered or recommended by Design-Builder
to Owner or (ii) arising from modifications to the Work by Owner or its agents
after acceptance of the Work. However, if Design-Builder has reason to believe
the specified process or product or modifications to the Work by Owner is an
infringement or violation of a patent or copyright, Sections 7.1.1 and 7.1.2
above shall remain applicable notwithstanding the foregoing, unless Design
Builder promptly furnished such information to Owner.
7.1.4 The obligations set forth in this Section 7.1 shall constitute
the sole agreement between the parties relating to liability for infringement of
violation of any patent or copyright.
7.2 TAX CLAIM INDEMNIFICATION
7.2.1 If, in accordance with Owner's direction, an exemption for all
or part of the Work is claimed for taxes, Owner shall indemnify, defend and hold
harmless Design-Builder from and against any liability, penalty, interest, fine,
tax assessment, attorneys' fees or other expenses or costs incurred by
Design-Builder as a result of any action taken by Design-Builder in accordance
with Owner's directive.
7.3 PAYMENT CLAIM INDEMNIFICATION
7.3.1 To the fullest extent permitted by law and without limiting any
other indemnification obligations of Design-Builder, Design-Builder shall
indemnify and defend Owner, its officers, directors, assigns, lenders, agents,
and employees from any claims, liens, charges (including attorneys' fees) or
encumbrances (including but not limited to mechanic's and materialmen's liens or
bond claims) arising out of or in connection with the performance of the Work
except to the extent caused by the uncured failure of Owner to make payment when
required by the Contract Documents. Owner shall be entitled to recover from
Design-Builder all costs and expenses incurred in enforcing this Agreement,
including attorneys' fees. Upon request of Owner, Design-Builder shall within 60
days remove any liens filed against Owner or its property. If Design-Builder
fails to do so, Owner is authorized by Design-Builder to remove or satisfy any
such liens, and Design-Builder shall pay to Owner all costs and damages incurred
by Owner to do so, including attorneys' fees.
7.4 DESIGN-BUILDER'S GENERAL INDEMNIFICATION
7.4.1 Design-Builder, to the fullest extent permitted by law, shall
indemnify, hold harmless and defend with attorneys acceptable to Owner, Owner,
its lenders, officers, directors, employees and agents from and against claims,
losses, damages, liabilities, including attorneys' fees and expenses, for bodily
injury, sickness, disease, or death, and property damage or destruction (other
than to the Work itself) to the extent resulting from the negligent acts or
26
omissions of Design-Builder, Design Consultants, Subcontractors, anyone employed
directly or indirectly by any of them or anyone for whose acts any of them may
be liable. This Section shall not be construed to negate, abridge, or reduce
other rights or obligations of defense and indemnity which would otherwise
exist.
7.4.2 If an employee of Design-Builder, Design Consultants,
Subcontractors, anyone employed directly or indirectly by any of them or anyone
for whose acts any of them may be liable has a claim against Owner, its lenders,
officers, directors, employees, or agents, Design-Builder's indemnity obligation
set forth in Section 7.4.1 above shall not be limited by any limitation on the
amount of damages, compensation or benefits payable by or for Design-Builder,
Design Consultants, Subcontractors, or other entity under any employee benefit
acts, including workers' compensation or disability acts.
7.5 ACCESS TO BOOKS AND RECORDS.
Owner shall at all times have the right to inspect and copy the books
and records (however kept) of Design-Builder for verification of work done,
payments due, amounts claimed, obligations owed Subcontractors, Design
Consultants or any other aspect of Design-Builder's obligations. Design-Builder
shall keep books and records adequate to support its costs and charges, to
comply with generally accepted accounting principles, and to evidence compliance
with the Contract Documents. At Owner's request, Design-Builder shall promptly
provide evidence satisfactory to Owner of Design-Builder's compliance with the
Contract Documents.
ARTICLE 8
TIME
8.1 OBLIGATION TO ACHIEVE THE CONTRACT TIMES
8.1.1 Design-Builder agrees that it will commence performance of the
Work and achieve the Contract Time(s) in accordance with Article 5 of the
Agreement.
8.2 DELAYS TO THE WORK
8.2.1 If Design-Builder is delayed in the performance of the Work due
to acts, omissions, conditions, events, or circumstances beyond its control and
due to no fault of its own or those for whom Design-Builder is responsible, the
Contract Time(s) for performance shall be reasonably extended by Change Order.
By way of example, events that will entitle Design-Builder to an extension of
the Contract Time(s) include acts or omissions of Owner or anyone under Owner's
control (including separate contractors), changes in the Work, Differing Site
Conditions, Hazardous Conditions, wars, floods, labor disputes not directed at
Design-Builder or its Subcontractors or Sub-subcontractors, unusual delay in
transportation, epidemics abroad, earthquakes, adverse weather conditions not
reasonably anticipated, and other acts of God.
27
8.2.2 In addition to Design-Builder's right to a time extension for
those events set forth in Section 8.2.1 above, Design-Builder shall also be
entitled to an appropriate adjustment of the Contract Price for direct costs for
delays caused by Owner provided, however, that the Contract Price shall not be
adjusted for those events set forth in Section 8.2.1 above that are beyond the
control of Owner, including the events of war, floods, labor disputes, delays in
transportation, earthquakes, epidemics, adverse weather conditions not
reasonably anticipated, and other acts of God.
ARTICLE 9
CHANGES TO THE CONTRACT PRICE AND TIME
9.1 CHANGE ORDERS
9.1.1 A Change Order is a written instrument issued after execution of
the Agreement signed by Owner and Design-Builder, stating their agreement upon
all of the following:
.1 The scope of the change in the Work;
.2 The amount of the adjustment to the Contract
Price(If the Change Order is silent as to the amount of the
adjustment to the Contract Price, then the Contract Price shall
be deemed to be unchanged by the Change Order.); and
.3 The extent of the adjustment to the Contract
Time(s). If the Change Order is silent as to the adjustments to
the Contract Time(s), then the Contract Time(s) shall be deemed
to be unchanged by the Change Order.
9.1.2 All changes in the Work authorized by applicable Change Order
shall be performed under the applicable conditions of the Contract Documents.
Owner and Design-Builder shall negotiate in good faith and as expeditiously as
possible the appropriate adjustments for such changes.
9.1.3 If Owner requests a proposal for a change in the Work from
Design-Builder and subsequently elects not to proceed with the change, a Change
Order shall be issued to reimburse Design-Builder for reasonable costs incurred
for estimating services, design services and services involved in the
preparation of proposed revisions to the Contract Documents, but not to exceed
$2,000 per request unless authorized by Owner in writing to exceed this limit.
9.2 WORK CHANGE DIRECTIVES
9.2.1 Owner has the right to order changes in the Work at any time
within the general scope of the Contract Documents. A Work Change Directive is a
written order prepared and signed by Owner, directing a change in the Work prior
to agreement on an adjustment in the Contract Price and/or the Contract Time(s).
28
9.2.2 Owner and Design-Builder shall negotiate in good faith and as
expeditiously as possible the appropriate adjustments for the Work Change
Directive. Upon reaching an agreement, the parties shall prepare and execute an
appropriate Change Order reflecting the terms of the agreement.
9.3 MINOR CHANGES IN THE WORK
9.3.1 Minor changes in the Work do not involve an adjustment in the
Contract Price and/or Contract Time(s) and do not materially and adversely
affect the Work, including the design, quality, performance and workmanship
required by the Contract Documents. Design-Builder may make minor changes in the
Work consistent with the intent and requirements of the Contract Documents, but
only if approved by Owner in writing, Design-Builder shall promptly inform
Owner, in writing, of any such changes and record such changes on the documents
maintained by Design-Builder.
9.4 CONTRACT PRICE ADJUSTMENTS
9.4.1 The increase or decrease in Contract Price resulting from a
change in the Work shall be determined by one or more of the following methods:
.1 unit prices set forth in the Agreement or as
subsequently agreed to between the parties;
.2 a mutually accepted, lump sum, properly
itemized and supported by sufficient substantiating data to
permit evaluation by Owner;
.3 costs, fees and any other markups set forth
in the Agreement; and
.4 if an increase or decrease cannot be agreed to
as set forth in items .1 through .3 above and Owner issues a
Work Change Directive, the cost of the change of the Work shall
be determined by the reasonable expense and savings in the
performance of the Work resulting from the change, including a
reasonable overhead and profit, as may be set forth in the
Agreement. Design-Builder shall maintain a documented, itemized
accounting evidencing the expenses and savings associated with
such changes.
9.4.2 If unit prices are set forth in the Contract Documents or are
subsequently agreed to by the parties, but application of such unit prices will
cause substantial inequity to Owner or Design-Builder because of differences in
the character or quantity of such unit items as originally contemplated, such
unit prices shall be equitably adjusted.
9.4.3 If Owner and Design-Builder disagree upon whether Design-Builder
is entitled to be paid for any services required by Owner, or if there are any
other disagreements over the scope of Work or proposed changes to the Work,
Owner and Design-Builder shall resolve the
29
disagreement pursuant to Article 10 hereof. As part of the negotiation process,
Design-Builder shall furnish Owner with a good faith estimate of the costs to
perform the disputed services in accordance with Owner's interpretations.
9.5 EMERGENCIES
9.5.1 In any emergency affecting the safety of persons and/or
property, Design-Builder shall act, at its discretion, to prevent threatened
damage, injury or loss. Any change in the Contract Price and/or Contract Time(s)
to which Design-Builder is entitled under other provisions of the Contract
Documents on account of emergency work shall be determined as provided in this
Article 9.
ARTICLE 10
CONTRACT ADJUSTMENTS AND DISPUTES
10.1 REQUESTS FOR CONTRACT ADJUSTMENTS AND RELIEF
10.1.1 If either Design-Builder or Owner believes that it is entitled
to relief against the other for any event arising out of or related to the Work
or Project, such party shall provide written notice to the other party of the
basis for its claim for relief. Such notice shall, if possible, be made prior to
incurring any cost or expense and in accordance with any specific notice
requirements contained in applicable sections of these General Conditions of
Contract. In the absence of any specific notice requirement, written notice
shall be given within a reasonable time, not to exceed twenty- one (21)days,
after the occurrence giving rise to the claim for relief or after the claiming
party reasonably should have recognized the event or condition giving rise to
the request, whichever is later. Such notice shall include sufficient
information to advise the other party of the circumstances giving rise to the
claim for relief, the specific contractual adjustment or relief requested and
the basis of such request. Design-Builder specifically waives the right to make
any claims not made in the required manner within the time required by this
Section 10.1.1.
10.2 DISPUTE AVOIDANCE AND RESOLUTION
10.2.1 The parties are fully committed to working with each other
throughout the Project and agree to communicate regularly with each other at all
times so as to avoid or minimize disputes or disagreements. If disputes or
disagreements do arise, Design-Builder and Owner each commit to resolving such
disputes or disagreements in an amicable, professional and expeditious manner so
as to avoid unnecessary losses, delays and disruptions to the Work.
10.2.2 Design-Builder and Owner will first attempt to resolve disputes
or disagreements at the field level through discussions between Design-Builder's
Representative and Owner's Representative.
30
10.2.3 If a dispute or disagreement cannot be resolved through
Design-Builder's Representative and Owner's Representative, Design-Builder's
Senior Representative and Owner's Senior Representative, upon the request of
either party, shall meet as soon as conveniently possible, but in no case later
than thirty (30)days after such a request is made, to attempt to resolve such
dispute or disagreement. Prior to any meetings between the Senior
Representatives, the parties will exchange relevant information that will assist
the parties in resolving their dispute or disagreement.
10.3 ARBITRATION
10.3.1 Any claims, disputes or controversies between the parties
arising out of or relating to the Agreement, or the breach thereof, which have
not been resolved in accordance with the procedures set forth in Section 10.2
above shall be decided by arbitration in accordance with the Construction
Industry Arbitration Rules of the AAA then in effect, unless the parties
mutually agree otherwise. The arbitration proceedings shall be held in the
location designated by Owner.
10.3.2 The award of the arbitrator(s) shall be final and binding upon
the parties without the right of appeal to the courts. Judgment may be entered
upon it in accordance with applicable law by any court having jurisdiction
thereof.
10.3.3 Design-Builder and Owner expressly agree that any arbitration
pursuant to this Section 10.3 may be joined or consolidated with any arbitration
involving any other person or entity (i) necessary to resolve the claim, dispute
or controversy, or (ii) substantially involved in or affected by such claim,
dispute or controversy. Both Design-Builder and Owner will include appropriate
provisions in all contracts they execute with other parties in connection with
the Project to require such joinder or consolidation.
10.3.4 The prevailing party in any arbitration, or any other final,
binding dispute proceeding upon which the parties may agree, shall be entitled
to recover from the other party reasonable attorneys' fees and expenses incurred
by the prevailing party.
10.4 DUTY TO CONTINUE PERFORMANCE
10.4.1 Unless provided to the contrary in the Contract Documents,
Design-Builder shall continue to perform the Work and Owner shall continue to
satisfy its payment obligations to Design-Builder, pending the final resolution
of any dispute or disagreement between Design-Builder and Owner.
10.5 CONSEQUENTIAL DAMAGES
10.5.1 Notwithstanding anything herein to the contrary (except as set
forth in section 10.5.2 below), neither design-builder nor owner shall be liable
to the other for any consequential
31
losses or damages, whether arising in contract, warranty, tort (including
negligence), strict liability or otherwise, including but not limited to losses
of use, profits, business, reputation or financing.
10.5.2 The consequential damages limitation set forth in Section 10.5.1
above is not intended to affect the payment of liquidated damages, if any, set
forth in the Agreement, which both parties recognize has been established, in
part, to reimburse Owner for some damages that might otherwise be deemed to be
consequential.
ARTICLE 11
STOP WORK AND TERMINATION FOR CAUSE
11.1 OWNER'S RIGHT TO STOP WORK
11.1.1 Owner may, without cause and for its convenience, order
Design-Builder in writing to stop and suspend the Work. Such suspension shall
not exceed ninety (90)consecutive days or aggregate more than one hundred fifty
(150)days during the duration of the Project.
11.1.2 Design-Builder is entitled to seek an adjustment of the Contract
Price and/or Contract Time(s) if its cost or time to perform the Work has been
adversely impacted by any suspension of stoppage of work by Owner not resulting
from the fault of Design-Builder.
11.2 Owner's Right to Perform and Terminate for Cause
11.2.1 If Design-Builder (i) persistently fails to provide a sufficient
number of skilled workers, (ii) fails to supply the materials required by the
Contract Documents, (iii) fails to comply with applicable Legal Requirements,
(iv) fails to timely pay, without cause, Design Consultants or Subcontractors,
(v) fails to prosecute the Work with promptness and diligence to ensure that the
Work is completed by the Contract Time(s), as such times may be adjusted, or
(vi) fails to perform other material obligations under the Contract Documents,
then Owner, in addition to any other rights and remedies provided in the
Contract Documents or by law, shall have the rights set forth in Sections 11.2.2
and 11.2.3 below.
11.2.2 Upon the occurrence of an event set forth in Section 11.2.1
above, Owner may provide written notice to Design-Builder that it intends to
terminate the Agreement unless the problem cited is cured, or commenced to be
cured, within seven (7)days of Design-Builder's receipt of such notice. If
Design-Builder fails to cure, or reasonably commence to cure, such problem then
Owner may give a second written notice to Design-Builder declaring the Agreement
terminated for default.
11.2.3 Upon declaring the Agreement terminated pursuant to Section
11.2.2 above, Owner may enter upon the premises and take possession, for the
purpose of completing the Work, of all materials, equipment, scaffolds, tools,
appliances and other items thereon, which have been purchased or provided for
the performance of the Work, all of which Design-Builder
32
hereby transfers, assigns and sets over to Owner for such purpose, and to employ
any person or persons to complete the Work and provide all of the required
labor, services, materials, equipment and other items. In the event of such
termination, Design-Builder shall not be entitled to receive any further
payments under the Contract Documents until the Work shall be finally completed
in accordance with the Contract Documents. At such time, if the unpaid balance
of the Contract Price for Work performed prior to its default exceeds the cost
and expense incurred by Owner in completing the Work, such excess shall be paid
by Owner to Design-Builder. Design-Builder will only be entitled to be paid for
Work performed prior to its default. If Owner's cost and expense of completing
the Work exceeds the unpaid balance of the Contract Price, then Design-Builder
shall be obligated to pay the difference to Owner. Such costs and expense shall
include not only the cost of completing the Work, but also losses, damages,
costs and expense, including attorneys' fees and expenses, incurred by Owner in
connection with the reprocurement and defense of claims arising from
Design-Builder's default, subject to the waiver of consequential damages set
forth in Section 10.5 hereof.
11.2.4 If Owner improperly terminates the Agreement for cause, the
termination for cause will be converted to a termination for convenience in
accordance with the provisions of Article 8 of the Agreement.
11.3 DESIGN-BUILDER'S RIGHT TO STOP WORK
11.3.1 Design-Builder may, in addition to any other rights afforded
under the Contract Documents or at law, stop work for the following reasons:
.1 Owner's failure to provide financial
assurances as required under Section 3.3 hereof; or
.2 Owner's failure to pay amounts properly due
under Design-Builder's Application for Payment.
11.3.2 Should any of the events set forth in Section 11.3.1 above
occur, Design-Builder has the right to provide Owner with written notice that
Design-Builder will stop work unless said event is cured within seven (7)days
from Owner's receipt of Design-Builder's notice. If Owner does not cure the
problem within such seven (7)day period, Design-Builder may stop work. In such
case, Design-Builder shall be entitled to make a claim for adjustment to the
Contract Price and Contract Time(s) to the extent it has been adversely impacted
by such stoppage.
11.3.3 ASSIGNMENTS UPON TERMINATION
11.3.3.1 Upon any termination by either party, to the extent
Owner elects to take legal assignment of contracts and purchase orders
(including rental agreements) (and Design-Builder hereby grants to Owner
the right to do so), Design-Builder shall execute and deliver all such
documents and take all such actions as Owner may require for the
33
purpose of fully vesting Owner with the rights and benefits of
Design-Builder under such contracts and purchase orders. Design-Builder,
and not Owner, shall remain liable for all obligations under those
contracts and purchase orders preceding the later of the date of
termination or the effective date of the assignment. The effective date
of the assignment shall be the date designated by Owner as the effective
date of the assignment.
11.4 DESIGN-BUILDER'S RIGHT TO TERMINATE FOR CAUSE
11.4.1 Design-Builder, in addition to any other rights and remedies
provided in the Contract Documents or by law, may terminate the Agreement for
cause for the following reasons:
.1 The Work has been stopped for ninety
(90)consecutive days, or more than one hundred fifty (150)days
during the duration of the Project, because of court order, any
government authority having jurisdiction over the Work, or
orders by Owner under Section 11.1.1 hereof, provided that such
stoppages are not due to the acts or omissions of Design-Builder
or anyone for whose acts Design-Builder may be responsible.
.2 Owner's failure to provide Design-Builder
with any information, permits or approvals that are Owner's
responsibility under the Contract Documents which result in the
Work being stopped for ninety (90)consecutive days, or more than
one hundred fifty (150)days during the duration of the Project,
even though Owner has not ordered Design-Builder in writing to
stop and suspend the Work pursuant to Section 11.1.1 hereof.
.3 Owner's failure to cure the problems set
forth in Section 11.3.1 above after Design-Builder has stopped
the Work.
11.4.2 Upon the occurrence of an event set forth in Section 11.4.1
above, Design-Builder may provide written notice to Owner that it intends to
terminate the Agreement unless the problem cited is cured, or commenced to be
cured, within seven (7)days of Owner's receipt of such notice. If Owner fails to
cure, or reasonably commence to cure, such problem, then Design-Builder may give
a second written notice to Owner of its intent to terminate within an additional
seven (7)day period. If Owner, within such second seven (7)day period, fails to
cure, or reasonably commence to cure, such problem, then Design-Builder may
declare the Agreement terminated for default by providing written notice to
Owner of such declaration. In such case, Design-Builder shall be entitled to
recover in the same manner as if Owner had terminated the Agreement for its
convenience under Article 8 of the Agreement.
34
11.5 BANKRUPTCY OF OWNER OR DESIGN-BUILDER
11.5.1 If either Owner or Design-Builder institutes or has instituted
against it a case under the United States Bankruptcy Code (such party being
referred to as the "Bankrupt Party"), such event may impair or frustrate the
Bankrupt Party's ability to perform its obligations under the Contract
Documents. Accordingly, should such event occur:
.1 The Bankrupt Party, its trustee or other
successor, shall furnish, upon request of the non-Bankrupt
Party, adequate assurance of the ability of the Bankrupt Party
to perform all future material obligations under the Contract
Documents, which assurances shall be provided within ten
(10)days after receiving notice of the request; and
.2 The Bankrupt Party shall file an appropriate
action within the bankruptcy court to seek assumption or
rejection of the Agreement within sixty (60)days of the
institution of the bankruptcy filing and shall diligently
prosecute such action.
If the Bankrupt Party fails to comply with its foregoing obligations, the
non-Bankrupt Party shall be entitled to request the bankruptcy court to reject
the Agreement, declare the Agreement terminated and pursue any other recourse
available to the non-Bankrupt Party under this Article 11.
11.5.2 The rights and remedies under Section 11.5.1 above shall not be
deemed to limit the ability of the non-Bankrupt Party to seek any other rights
and remedies provided by the Contract Documents or by law, including its ability
to seek relief from any automatic stays under the United States Bankruptcy Code
or the right of Design-Builder to stop Work under any applicable provision of
these General Conditions of Contract.
ARTICLE 12
MISCELLANEOUS
12.1 ASSIGNMENT
12.1.1 The Design-Builder shall not, without the written consent of
Owner, transfer or sublet any portion or part of the Work or the obligations
required by the Contract Documents.
12.2 SUCCESSORSHIP
12.2.1 Design-Builder and Owner intend that the provisions of the
Contract Documents are binding upon the parties, their employees, agents, heirs,
successors and assigns.
12.3 GOVERNING LAW
12.3.1 The Agreement and all Contract Documents shall be governed by
the laws of the place of the Project, without giving effect to its conflict of
law principles.
35
12.4 SEVERABILITY
12.4.1 If any provision or any part of a provision of the Contract
Documents shall be finally determined to be superseded, invalid, illegal, or
otherwise unenforceable pursuant to any applicable Legal Requirements, such
determination shall not impair or otherwise affect the validity, legality, or
enforceability of the remaining provision or parts of the provision of the
Contract Documents, which shall remain in full force and effect as if the
unenforceable provision or part were deleted.
12.5 NO WAIVER
12.5.1 The failure of either Design-Builder or Owner to insist, in any
one or more instances, on the performance of any of the obligations required by
the other under the Contract Documents shall not be construed as a waiver or
relinquishment of such obligation or right with respect to future performance.
12.6 HEADINGS
12.6.1 The headings used in these General Conditions of Contract, or
any other Contract Document, are for ease of reference only and shall not in any
way be construed to limit or alter the meaning of any provision.
12.7 NOTICE
12.7.1 Whenever the Contract Documents require that notice be provided
to the other party, notice will be deemed to have been validly given (i) if
delivered in person to the individual intended to receive such notice, (ii) four
(4) days after being sent by registered or certified mail, postage prepaid to
the address indicated in the Agreement or (iii) if transmitted by facsimile, by
the time stated in a machine generated confirmation that notice was received at
the facsimile number of the intended recipient.
12.8 AMENDMENTS
12.8.1 The Contract Documents may not be changed, altered, or amended
in any way except in writing signed by a duly authorized representative of each
party.
36
EXHIBIT C
PROJECT RESPONSIBILITY MATRIX
==================================================================
Note: This EXHIBIT C identifies the party responsible for items in
connection with the Project. Except for those items specifically
identified as an Owner responsibility item on this EXHIBIT C,
Design-Builder (or "DB" in this Exhibit) shall be responsible for
all items to design and construct the Project and the entire Work
at the Contract Price.
==================================================================
SECTION DESCRIPTION OWNER DB NOTES
---------------------- --------------------------------------------- -------- ---- -------------------------------
PHASE 1: Feasibility Studies X
PROJECT Letter of Intent for Design Build Firm X
DEVELOPMENT: Site Selection:
Surveys, Topo, Geotech, Prepare Land
Purchase Option X X DB to provide tech assistance
PRE-FUNDING & Business Plan X
PRE-OPERATIONS Develop/Finalize Plant Specification X X DB to provide tech assistance
Develop EPC Contract X X
Finalize Debt Structure X
Environmental Assessments & Permits X X DB to provide tech assistance
Business Licenses X
Preclosing & Closing Costs
ENGINEERING & PROJ Process Technology License Fees X
MANAGEMENT Fuel Ethanol Process Design X
Mechanical & Piping Design X
Civil, Structural & Architectural Design X
Electrical & Instrumentation Design X
Procurement Administration X
Project & Site Management X
Field Engineering X
Startup & Commissioning X X See footnote 1
Construction Permitting X
SITE Land Acquisition X
Rail Spur Tie-in X
Rail Spur (within battery limits) X
Internal Roads X X DB will maintain and finish
pave
Site Preparation (prepare for work) X X DB to provide tech assistance
General Site Work (excavation, grading, X
erosion control)
Security Fence X
1
SECTION DESCRIPTION OWNER DB NOTES
---------------------- --------------------------------------------- -------- ---- -------------------------------
ETHANOL PLANT Grain Receiving, Handling & Storage X
Starch Conversion X
Fermentation X
Distillation X
Dehydration X
Fuel Alcohol Storage & Loadout X
Stillage Processing X
Evaporation X
Drying X
DDGS Storage & Loadout X
CIP & Auxiliary Systems X
Chemical & Enzyme Storage X
Water Treatment X $75,000 allowance
Emission Control Equipment X Thermal Oxidizer, ultra low
NOx burners, vapor recovery
system
CO(2) PLANT Plant to purify and liquefy CO2 from EtOH
fermentation X
UTILITIES & Steam Generation & Distribution X
BUILDING SERVICES Cooling Tower & Cooling Water
Distribution X
Plant Air & Instrument Air System X
Electrical Service Connection & Substation X
Electrical Distribution (within battery X Transformers may be provided
limits) by third parties, which will
result in credit to Owner.
Natural Gas Connection X
Natural Gas Distribution (within battery X
limits)
Municipal Sewer Connection X May not be necessary
Lift Station & Site Sewer Lines X
On-Site Wastewater Treatment X
Municipal Water Connection X
Fire Protection System (electric fire pump
with enclosure along with water intake
structure, fireloop, foam monitors and
portable foam system (▇▇▇▇▇▇ design is
baseline design)) X Subject to final underwriting
Boiler & Cooling Twr. Water Treatment
Chemicals X
Telecommunication Lines to Perimeter X
2
SECTION DESCRIPTION OWNER DB NOTES
----------------------- ---------------------------------------------- --------- ----- -------------------------------
MISCELLANEOUS Administration Building/Parking X
Office Equipment & Furniture X
Control Room with Furniture & computers X X DB computers only-contrm
Laboratory Fixtures X Cabinets, countertops, sinks,
plumbing, etc.
Laboratory Furniture & equipment X Desks, chairs, file cabinets
Maintenance Equipment X
Spare Parts Inventory X
Chemicals, Enzymes, Denaturant Inventory X
Feedstock Inventory X
Rolling Stock (pickup, payloader, skidloader,
etc.) X
Preproduction Operating Expenses X
(salaries, training, etc.)
Safety equipment X
Freight for all equipment X
Sales Tax X
Builders Risk Insurance X
Winter Construction X X See Footnote 2
----------
(1) Owner to receive minimally $100,000 credit from GreenWay. DB will be
required to provide technical support for training and commissioning. In
addition, DB will be required to provide a swat team during the commissioning
period to correct deficiencies identified during the start-up process. The swat
team will consist of craft people, hand picked by Owner, primarily from the pipe
fitter, pipe welder and electrical trades.
(2) Owner will be responsible for the cost of building, erecting and removing
temporary shelters, based on a mutually agreeable unit price. Owner will be
responsible for the cost of propane for temporary heat. Owner will be
responsible for incremental concrete costs; e.g. hot water, high/early mix, etc.
DB responsible for all other.
3
ATTACHMENT EXHIBIT C
REGULATORY PERMITS
RESPONSIBILITY
FOR OBTAINING ASSISTANCE IN
NO. TYPE OF APPLICATION/PERMIT PERMIT PREPARATION NOTES
-------- ------------------------------------------- ----------------- --------------- ---------------------------
1 Wetland Replacement Plan Application Owner DB To provide tech assistance
2 Septic Tank & Drain Field Permit DB
3 CC & P Railroad Owner
4 Archeological survey Owner
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Permit Owner
6 Building Permits DB
Mechanical DB
Electrical DB
Structures DB
7 Construction Air Permit Owner DB To provide tech assistance
8 Illinois Dept. of Transportation Owner
9 NPDES Stormwater Permit Owner DB 180 days prior to
discharge. Drainage and
pond construction by owner
10 NPDES Wastewater Permit Owner DB Blowdown to pond must be
applied for 180 days
prior to discharge. A
land application permit
is required for land
spreading of stillage
11 NPDS Construction Activities Permit Owner DB
12 Fire Protection DB
13 Above Ground Storage Tank Permit DB
14 Well application & Permit DB May not be required
15 ▇.▇.▇.▇.▇. - Joint Utility Locating DB
Information for Underground Excavators
4
EXHIBIT D
MINIMUM PROJECT SCOPE AND SPECIFICATIONS
=======================================================================
Note: Except for those items listed as an Owner Responsibility item on
EXHIBIT C, Design-Builder is responsible for all items to design and
construct the Project and the entire Work at the Contract Price.
=======================================================================
The Project shall meet the following minimum scope and specification criteria:
1. Plant Capacity/Design Criteria
a. The Ethanol Plant shall be a new, dry mill fuel grade ethanol
plant, with a nameplate capacity of 50 MMGPY of denatured fuel
grade ethanol minimally meeting ASTM 4806 specifications
b. The design criteria shall be minimally 110% of the nameplate
capacity in all areas of the Ethanol Plant except for utilities
or as otherwise stated on this Exhibit D
c. The Ethanol Plant shall include the following items to
accommodate expansion of capacity of Ethanol Plant to 100 MMGPY:
higher building height (of at least 3') to accommodate an
additional level in the main pipe rack; site layout will show
expanded plant as dotted lines.
2. Grain Storage
a. Allow for ten (10) days grain storage, assuming the plant is
running at 120% of nameplate capacity. (Reference here and below
to "capacity" and "nameplate capacity" means the annual
production capacity guaranteed by Design-Builder.); 600,000
bushels total storage.
b. GSI Steel Bins, with sloped concrete foundations; two (2)
300,000 Bushel Bins, plus one (1) 5,000 Bushel Surge Bin.
3. Grain Receiving
a. Allow for simultaneous rail car and truck unloading including
scales; rail unloading pit will hold 700 bushels and dual truck
unloading pits will hold 450 bushels each.
b. Two 15,000 Bu/hr Drag Conveyors.
c. Two 15,000 Bu/hr Legs.
4. ▇▇▇▇
a. All pipe and tank construction to be of 304 stainless steel.
b. Ability to CIP Mash Coolers without shutting down ▇▇▇▇ system.
1
5. Fermentation
a. All pipe and tank construction to be of 304 stainless steel.
b. Fermenter capacity; minimum three (3) tanks at 800,000 gallons
each.
c. Individual Fermentation Coolers.
d. Top mounted agitation in Fermentation tanks.
e. Beerwell capacity is 1,000,000 gallons.
f. CIP system.
g. Enzyme Tank capacity; 3 tanks of _____ gallons capable of
receiving Bulk Delivery of ALPHA Amalase, Gluco Amalase and
Sulfuric Acid.
h. Yeast propagation capacity.
6. Distillation and Evaporation
a. Distillation columns constructed of 304 SS.
b. Ability to run Distillation when Mole Sieve is shut down.
c. CIP System to clean heat exchangers and Beer column.
d. Evaporators constructed of stainless steel.
e. Evaporator sized so 1 effect can be taken offline at all times
to be cleaned without plant downtime or reduction in plant
production.
f. Pumps and Effects sized to handle high solid syrup, 35% to 40%,
and to minimize fouling rates.
7. Dryer Section
a. Equipment made of stainless steel.
b. Ability to run dryer and split the Wet Cake stream.
c. Centrifuge capacity; five (5) centrifuges - building space for
6th centrifuge.
d. Install BACT so plant can run at full capacity and remain a
synthetic minor, which shall include thermal oxidizer, ultra low
NOx burners in TO and driers.
8. Utilities
a. Softening equipment sized in accordance with water quality and
make up requirements for cooling tower and boiler. $75,000 water
allowance will be adequate based on following water quality:
i. Total hardness of less than 12 grains per gallon and
less than 420 mg/L of TDS; and
ii. Iron content of .5 mg/L or less.
b. Steam System sized to run 120% capacity.
c. Cooling tower and Chiller sized to run 120% capacity during the
summer months.
9. Ethanol Storage and Load-Out
a. Allow for ten (10) days ethanol storage in the tank farm; two
(2) tanks at 750,000 gallons each; total 1.5 million gallons.
2
b. Allow for simultaneous load-out of rail cars and trucks.
c. Allow for two denaturant storage tanks, each 60,000 gallons for
total of 120,000 gallons of storage in the tank farm.
d. Allow for minimum one (1) day production in 200 proof day tanks
- 360,000 gallons total.
e. Allow for two 190 proof tanks, each 50,000 gallons for a total
of 100,000 gallons of storage in the tank farm.
f. Vapor Recovery System will be to thermal oxidizer.
10. DDG Storage
a. Allow for seven (7) days storage in DDGS Building. Building size
- 150' x 150' x 20' eave height.
b. Install truck and rail loading equipment; capable of load-out
rates of: 30 min. to load rate car, and 15 min. to load truck.
c. Install adequate DWG pad for three (3) days DWG production.
11. Maintenance and Spare Parts Inventory
a. Allow for plant maintenance area.
b. Allow for spare parts inventory area.
c. 6,000 square foot separate building.
12. Control System
a. DCS System placed in dust free, climate-controlled environment.
b. High performance control valves constructed of materials
compatible with all process streams.
13. Key Protection and Safeguard Requirements
a. Distillation, Dehydration and Evaporation (DDE) Building.
i. Special electrical equipment in the DDE Building, (Class
I Division I, Group D near the distillation columns and
Class I, Division 2, Group D beyond).
ii. Ventilation is needed in the DDE Building at a rate of 1
cfm/sq.ft. of floor area taking suction within 12 inches
of the floor.
iii. The Control Room should be isolated and cut-off from the
DDE Building.
iv. Containment curbing is needed for the DDE Building.
v. Static bonding/grounding, emergency pressure relief for
the process columns, failsafe process interlocks,
properly arranged steam supply for the process.
b. Finished Product and Denaturant (Gasoline) Storage Tanks
i. Diking for the Largest tank.
ii. Emergency venting of the tanks.
3
iii. Flammable liquid pumping interlocks.
iv. These should be located safely away from the plant
buildings so they do not expose the buildings to damage
should they be involved in a fire.
c. Rail / Truck Load Out Area
i. Containment to prevent a spill from exposing nearby
buildings.
ii. Pumping interlocks to prevent a large uncontrolled
spill.
iii. Static grounding/bonding.
iv. Special electrical equipment (Class I, Division I, Group
B).
d. Distillers Dried Grains and Solubles Area (DDGS)
i. Special electrical equipment in grain handling areas
(Class II, Division I).
ii. Magnetic separator located at truck dump hoppers and
ahead of the hammermills.
iii. Provide belt alignment switches for conveyors to shut
down if improperly tracking.
iv. Explosion venting for any dust collectors. Preferably,
any dust collectors should be located outside and not
recirculate the air stream back into the buildings.
v. The rotary dryer should have adequately arranged
fuel-burner combustion safety controls including high
temperature limit switches.
vi. Exterior elevator legs are preferred. Tunnels should be
avoided.
e. General Features
i. Noncombustible building construction.
ii. Reliable fire protection water supply with fire
hydrants.
iii. Monitored fire protection/detection alarm systems.
14. Best Available Control Technology - As used in this Agreement, best
available control technology will mean:
The Project and the entire Work will utilize best available control
technology ("BACT"), as of the date of this Agreement, to allow the
plant to remain a minor synthetic source in compliance with its permits
and otherwise in compliance with applicable federal, state and local
environmental laws, which items using BACT shall include a thermal
oxidizer, ultra low NOx burners for the thermal oxidizer and driers,
baghouses as required, vapor recovery system in the ethanol load-out
area, and paving of roads at the site. In addition to the foregoing
specific list of items using BACT, the parties will mutually agree upon
the additional items using BACT to allow plant to remain a minor
synthetic source in compliance with its permits and otherwise in
compliance with applicable federal, state and local environmental laws,
based on recommendation and advice of Design - Builder, ICM and
GreenWay.
4
EXHIBIT E
PERFORMANCE STANDARDS AND GUARANTEES CRITERIA
The Project and the entire Work shall meet or exceed the following Performance
Standards and Guarantees Criteria:
1. Project Output
a. The Ethanol Plant shall operate at a rate of and produce no less
than 50 Million Gallons Per Year (MMGPY) of denatured fuel grade
ethanol.
2. Ethanol Conversion
a. The Ethanol Plant shall convert corn to ethanol at no less than
2.81 gallons of denatured fuel grade ethanol per bushel of # 2
Yellow dent corn (56 pounds test weight).
3. Energy Consumption
a. Natural gas consumption shall not exceed 37,000 BTU per
denatured gallon of fuel grade ethanol.
b. Electrical consumption shall not exceed 1.0 kW per denatured
gallon of fuel grade ethanol.
4. Emission Standards
a. The Project and the entire Work must use best available control
technology as defined in EXHIBIT D to meet, and the Project and
the entire Work must meet, all EPA and state emission standards
to maintain synthetic minor status and to ensure compliance with
air permit.
5. Performance Tests
a. The Ethanol Plant will have to run at or near design rate for a
period of seven (7) days before the Performance Test is
initiated. The Performance Test will be performed at over three
(3) days. Design-Builder will provide Owner with a minimum
two-day notice of intent to begin the Performance Test.
NOTE: Performance Guarantee shortfalls will subject Design-Builder to
performance damages provisions and other Owner remedies, as mutually agreed upon
by Owner and Design - Builder in the Preliminary Agreement and the other
Contract Documents.